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You are here: Home . rules . 2004 . 1029-059
Archived File – for Reference Use.
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Subchapter A. General Provisions

§§11.1 and 11.2

Subchapter B. Name Application Procedure

§11.101

Subchapter C. Application for Certificate of Authority

§§11.201 ­ 11.206

Subchapter D. Regulatory Requirements for an HMO Subsequent to Issuance of Certificate of Authority

§§11.301 ­ 11.303

Subchapter F. Evidence of Coverage

§§11.502 ­ 11.506, 11.508, 11.509, and 11.512

Subchapter G. Advertising and Sale s Material

§§11.602 and 11.603

Subchapter I. Financial Requirements

§§11.801 ­ 11.803, 11.806, 11.809, and 11.810

Subchapter J. Physician and Provider Contracts and Arrangements

§§11.901, 11,902, and 11.904

SUBCHAPTER K. Required Forms

§11.1001

Subchapter N. HMO Solvency Surveillance Committee Plan of Operation

§§11.1301 ­ 11.1306

Subchapter O. Administrative Procedures

§§11.1401 ­ 11.1404

Subchapter P. Prohibited Practices

§11.1500

Subchapter Q. Other Requirements

§§11.1600 ­ 11.1602, 11.1604 - 11.1607

Subchapter R. Approved Nonprofit Health Corporations

§§11.1702 ­ 11.1704

Subchapter S. Solvency Standards for Managed Care Organizations Participating in Medicaid

§§11.1801 ­ 11.1806

Subchapter T. Quality of Care

§§11.1901 and 11.190 2

Subchapter V. Standards for Community Mental Health Centers

§§11.2101 ­ 11.2103

Subchapter W. Single Service HMOs

§§11.2200, 11.2201, 11.2203, 11.2204, 11.2207, and 11.2208

Subchapter X. Provider Sponsored Organizations

§§11.2303, 11.2311, and 11.2314

Subchapter Y. Limited Service HMOs

§§11.2402, 11.2405, and 11.2406

Subchapter Z. Point-of-Service Riders

§§11.2501 ­ 11.2503

Subchapter AA. Delegated Entities

§§11.2601 and 11.2602

The Texas Department of Insurance proposes amendments to §§11.1, 11.2, 11.101, 11.201 ­ 11.206, 11.301 ­ 11.303, 11.502 ­ 11.506, 11.508, 11.509, 11.512, 11.602, 11.603, 11.801 ­ 11.803, 11.806, 11.809, and 11.810, 11.901, 11.904, 1.1001, 11.1301 ­ 11.1306, 11.1401 ­ 11.1404, 11.1500, 11.1600 ­ 11.1602, 11.1604 ­ 11.1607, 11.1702 ­ 11.1704, 11.1801 ­ 11.1806, 11.1901, 11.1902, 11.2101 ­ 11.2103, 11.2200, 11.2201, 11.2203, 11.2204, 11.2303, 11.2311, 11.2314, 11.2402, 11.2405, 11.2501 ­ 11.2503, 11.2601, and 11.2602, and new §§11.902, 11.2207, 11.2208, and 11.2406, concerning regulation of health maintenance organizations (HMOs). These amendments and new sections are necessary to implement statutory changes from prior legislative sessions and to update procedures and requirements to conform to certain nationally recognized standards. In addition, because these sections have not undergone comprehensive revision for a number of years, the department believes it is necessary to streamline and consolidate requirements to more accurately reflect acceptable HMO practices and TDI´s policies and procedures, and to clarify statutory requirements. The department also believes rule revision is necessary to respond to regulatory concerns that have arisen since the last revision. For example, many have questioned the necessity of the current rule´s requirements concerning full-time clinical directors (currently medical directors). After encou ntering this concern many times, the department has determined that the requirements should be modified in a way that is more efficient for HMOs to implement without compromising appropriate regulatory standards. Another example concerns the practice of "balance billing" of HMO enrollees, particularly where enrollees have in good faith utilized a contracted medical facility but have received services, such as ancillary services (e.g., anesthesiology, radiology, or pathology), fr om a non-contracted physician or provider. This issue has received considerable attention over the past several years, and the department believes that this revision of the HMO rules should clarify it. This issue, and the proposed rule revisions, are discussed more thoroughly herein.

The proposed amendments to §11.204(18) add a requirement that the HMO provide network configuration information, including maps demonstrating the location and distribution of the physician and provider network within the service area upon initial filing of an application for a certificate of authority. Proposed amendments to §§11.205(a)(6), 11.302(b)(3), and 11.303(c)(7) incorporate the requirement for this network configuration information. The changes are proposed to ensure full compliance with §843.078(k), which requires network configuration information to demonstrate network adequacy. The maps, by indicating where particular providers are located, are much more demonstrative of network sufficiency and accessibility than written descriptions. In addition, the proposed amendments also require that the HMO provide lists of physicians and individual and institutional providers, along with license type and specialization, and information concerning whether such physicians or individual providers are accepting new patients. The license type and specialization information allows TDI to more readily distinguish primary care physicians from specialists in determining network adequacy to support all types of covered services.

The proposed amendments to Subchapter C (§11.205)(a)(4)), which set out ten prescribed categories of complaints that HMOs must make available during examinations prior to and subsequent to issuance of a certificate of authority, basically require greater detail in, and expand on, the four categories of complaints HMOs are currently required to maintain. These proposed complaint categories are also referenced in Subchapter D (§11.303(c)(4)). TDI believes these amendments are necessary to facilitate review of complaints during examinations and to allow TDI and the industry to more specifically monitor problems and concerns in the face of marketplace changes that could impact enrollees. However, in order to allow sufficient time to implement these changes, TDI will consider allowing HMOs additional time to implement this requirement and it solicits commenters´ input on appropriate compliance dates.

The proposed changes to the Solvency Surveillance Committee (SSC) in Subchapter N (§11.1302) will provide a more flexible process that allows for better responsiveness to specific concerns regarding an HMO, while eliminating requirements for unnecessary meetings. Increased responsiveness and flexibility of the committee will ultimately better protect all enrollees receiving health care coverage from an HMO.The proposed amendments to Subchapter Q (§11.1606) clarify the responsibilities of an HMO´s Chief Executive Officer, Chief Operations Officer, and Clinical Director. Previously the rule emphasized factors such as full-time status and residence in the service area, while the proposal sets forth a description of the positions´ practical and functional requirements and responsibilities. The proposed change reflects the department´s understanding that executives can be responsible for operations in several states or several different service areas on less than a full-time basis in this state. TDI has, for many years, heard from some plans that the current rule´s requirement was not necessary to their circumstances. The proposal, which the department derived from its regulatory experience, recognized national standards, as well as actual HMOs´ job descriptions, gives HMOs the flexibility to determine how they can best manage and implement their executive duties, while making clear that the HMO must address and ensure satisfactory performance of the functions of the positions.

The proposed amendments to Subchapter S (§11.1802) prescribe a more comprehensive method for assessing the minimum capital or net worth of a Medicaid managed care organization (MCO) by incorporating Risk Based Capital (RBC) requirements, developed in coordination with the National Association of Insurance Commissioners (NAIC), for assessing capital adequacy. All HMOs, including those that are MCOs, must already comply with the RBC formula currently required in §11.809. Insurance Code Article 1.61 requires TDI, in conjunction with the Texas Health and Human Services Commission (HHSC), to establish fiscal solvency standards for MCOs, and these amendments are meant to ensure that MCOs that contract with the state operate in a fiscally sound manner. The proposed amendments to §11.1804 also allow a reduction in the special statutory deposit required for MCOs, taking into account certain guarantees from sponsoring organizations, and clarify that the reduction is unrelated to non-Medicaid business. The proposed amendments eliminate the automatic filing requirements for ce rtain financial information and instead require that such information be filed only upon the department´s request.

The proposed amendments to, and existing language in, Subchapters F (§11.506) and Q (§11.1600(b)(11)(D)) address the issue of "balance billing" of HMO enrollees by physicians and providers. Pursuant to the HMO Act, an HMO must establish a network of physicians and other providers with which it contracts to provide basic covered services which are delivered to enrollees on a prepaid basis. Because of the prepaid nature of HMO coverage, §843.361 requires that "[a] contract or other agreement between a health maintenance organization and a physician or provider must specify that the physician or provider will hold an enrollee harmless for payment of the cost of covered health care services if the health maintenance organization does not pay the provider for those services." It is not, and has never been, in dispute that contracted physicians and providers may not charge enrollees for services other than agreed copayments. However, for several years the department has addressed issues concerning enrollees who are billed by non-contracted physicians and providers. The issue has arisen in two areas: where enrollees receive treatment at network hospitals or facilities by non-contracted ancillary providers, and where enrollees receive emergency treatment at a non-network facility.

TDI has received complaints from HMO enrollees who have been balance billed under these circumstances, but to date it has informally resolved them through negotiation with the HMO and the provider. While TDI has been successful at resolving complaints in this manner, the issue persists. A 2003 Attorney General´s Opin ion (Op. No. GA-0040) held that the HMO Act does not prohibit a physician not under contract with an HMO from billing an enrollee for charges in addition to those paid by the HMO for the services. The opinion also held that TDI is not authorized to enforce the act against such a physician. While TDI has never sought to take enforcement action against a physician, the issue became more prominent following this ruling.

Accordingly, TDI proposes amendments to reiterate the statutory requirement that HMOs, which by law must provide basic health care services to enrollees on a prepaid basis, must cover the cost of such services so that enrollees are not billed for any balance. Proposed amendments to Subchapter Q (§11.1607(i)(4)) thus require HMOs that have been required to file an access plan due to inadequate numbers or types of physicians in their networks to state in such plan that the HMO will ensure that enrollees will be "indemnified or otherwise held harmless when non-participating physicians and providers provide services to enrollees due to the unavailability of the service from a physician or provider in the HMO´s network or network facility." This language is based on the prepaid nature of HMO coverage and the accessibility and availability requirements included in the HMO Act. Primarily, an HMO is defined as "a person who arranges for or provides to enrollees on a prepaid basis a health care plan, a limited health care service plan, or a single health care service plan." Texas Insurance Code §843.002 (emphasis added). The HMO Act requires that an HMO´s health plan be "an appropriate mechanism through which the health maintenance organization will effectively provide or arrange for the provision of basic health care services . . . on a prepaid basis . . ." Texas Insurance Code §843.082(3). An HMO must therefore enable an enrollee to obtain basic health care services without cost except for stated copayments and deductibles. In addition, the HMO Act requires that the services offered by HMOs must be accessible and available. This is accomplished through the HMO´s network of physicians and providers. The proposed amendments simply require that a network that does not meet the accessibility and availability standards of the statutes and regulations must have a backup or access plan that ensures enrollee access to the services for which they have prepa id and that they may do so without incurring additional cost.

To a great extent, the above proposal does not change the requirements of the current rule, which requires access plans to be filed under certain stated circumstances. For example, an HMO with an inadequate number of physicians of a certain specialty to serve the enrolled population would have to file a plan and agree to make these services available to enrollees as if the physicians had been on the HMO´s network. The proposal´s additional language basically restates the requirements of Article 20A.09(f) that, "If medically necessary covered services are not available through network physicians or providers, the health maintenance organization... shall allow referral to a non-network physician or provider and shall fully reimburse the non-network physician or provider at the usual and customary or an agreed rate." The proposal also does not in any way change this statute´s reimbursement provisions; an HMO is still free to attempt to contract with additional physicians and providers, or to negotiate a rate that is different from the prevailing rate in that area.

An HMO that has an adequate network and is therefore not required to file an access plan under §11.1607 is nevertheless subject to Article 20A.09(f) and existing §11.506(15). This means that an HMO must indemnify or otherwise hold harmless enrollees receiving covered services from out-of-network providers if the out-of-network services were necessary due to the unavailability of a network provider. If services are not available from network providers, the prepaid nature of HMOs dictates that enrollees receive these services without additional costs. This requirement does not affect services received without authorization from out-of-network providers, which are generally not covered by HMOs.

Proposed Subchapter F (§11.506) also clarifies that an HMO must cover an enrollee´s emergency medical care services, whether performed by network or out-of-network physicians and providers, and indemnify or otherwise hold enrollees harmless for the cost of such services. As previously stated, the Insurance Code requires HMOs to provide or arrange for the provision of basic health care services on a prepaid basis. "Basic health care services" are defined in §11.508(a)(1)(J) to include emergency services. Because an HMO must provide emergency services on a prepaid basis, the proposal ensures that the enrollee can access such services without being liable for additional costs.

Proposed §11.1600(b)(11)(D) includes a notice provision which requires HMOs, within the required list of providers, to provide notice regarding payment of non-contracted physicians and providers who provide either emergency care or medically necessary covered services due to the unavailability of a participating physician or provider. The notice, which must inform enrollees that the HMO will indemnify or otherwise hold enrollees harmless for such services, must also be listed on the internet sites of HMOs that maintain such sites.

In addition, while this proposal revises the definition of consumer choice health benefit plans, generally it does not seek to identify provisions that may be exempt from regulation under, or otherwise subject to, SB 541. The regulations specifically applicable to consumer choice plans are located at Subchapter AA, Chapter 21 of this title.

The proposed amendment to §11.1 revises the section´s title. Proposed amendments to §11.2(b) add a new definition for clinical director, revise the existing titles of the definitions of consumer choice plan, referral specialists, and state-mandated plan, and revise the text of the existing definitions of agent, consumer choice plan, premium, and state-mandated plan.

Proposed amendments to §11.101 update the contact information for obtaining forms.

The proposed amendments to § §11.202(a), 11.203(a) and 11.204 reduce the number of additional copies required at the time of application for a certificate of authority and for revised filings to expedite review and eliminate filing of unnecessary copies. The proposed amendment to §11.202(f) reflects a requirement for one original application, and deletes an original signature requirement to accommodate electronic filings. The proposed amendment to §11.204(13)(B) and §11.205(a)(7) clarify that the contracts between the HMO and delegated entities and/or delegated networks be provided as part of the application process and that such agreements be available during qualifying examinations. T he proposed amendment to §11.204(14) clarifies the required quality improvement plan description .

Proposed §11.204 (23) clarifies that the applicant must demonstrate appropriate operational structure and adequate management and staff to operate an HMO and fully comply with all statutory and regulatory requirements applicable to the HMO and any contracting entities. The proposed amendments to §11.205 clarify that referenced documents must be available for review at the HMO´s Texas office at time of examination, but may be physically maintained at a different site, add language about qualifications of management and staff, clarify complaints and appeals policies, and set out prescribed categories of complaints to facilitate analysis and provide for uniform categorization. The proposed amendments also clarify and simplify the reference to health information systems records, clarify the reference to network configuration documents, and consolidate the categories of executed agreements to be available during examination. The proposed amendments to §11.205 also change the requirement that the entire physi cian or provider contract be made available for review during examination; because of confidentiality concerns, the proposal requires that only the first page and signature page be made available.

Proposed §11.205(a)(14) concerning claims systems is added to determine the HMO´s capacity to comply with all applicable statutes and rules addressing claims payment. The proposed amendment to §11.205(a)(16) adds new language requiring the HMO, at the time of the qualifying examination, to demonstrate compliance with applicable laws, including audits or examination reports by other entities, which will provide TDI a more complete picture of the applicant and help the agency to pinpoint any areas requiring particular attention prior to licensing.

To make departmental review and storage of documents more efficient, the proposed amendments to §11.301 add requirements for filings; clarify that consistent with insurance form filing requirements, each form must have a printed unique form number; reduce the number of required form filings; and add the requirement that the HMO include a cover letter with such filings. The proposed amendments to §11.301 also add references to delegated entities and delegated networks and clarify that a filing must include a reconciliation of benefits to schedule of charges form. The proposed amendments to §§11.301(5)(G) and 11.303(c)(8)(C) clarify that contracts between the HMO and delegated entities and/or delegated networks are included in the documents that an HMO must file pursuant to Insurance Code Article 20A.18C and 28 TAC §11.2611 for examinations, and subsequent to issuance of the certificate of authority. The propos ed amendments to §11.302 clarify that, consistent with §§843.080 and 843.078(h), a request for any modification of the service area, including a reduction, must be filed with and approved by the department. The proposed amendments to §§11.302 and 11.303 also require the filing of network configuration information. The proposed amendments to §11.303 clarify that: the department may conduct complaint examinations in addition to other types of examinations; quality of care examinations, except those made pursuant to Insurance Code Article 1.15, may take place off-site; examinations may be conducted by examination teams rather than single examiners; and examination teams may conduct interviews of key management in connection with such examinations. Proposed amendments to §11.303 also identify the documents that should be available for review during examinations to include those documents that have been deleted from §11.205(a) as more appropriate for review after issuance of a certificate of authority. The proposed a mendments change the timeframe for correcting serious deficiencies from 10 business days to 12 calendar days.

To expedite review and eliminate the filing of unnecessary copies, the department reduced the number of copies of documents an HMO must file relating to an evidence of coverage in proposed §§11.502 and 11.503. Proposed §11.503 is changed to correct mail codes and clarify procedures for notifying HMOs of approval or disapproval. Proposed §11.505 clarifies that each form will have a different number, and expands the categories of variable language that can be included in form filings to include optional benefits and optional provisions. This flexibility will increase efficiency in form filings and facilitate greater speed to market. Proposed §11 .506 clarifies the statutory directive in Article 20A.09(a)(1) that every enrollee residing in this state is entitled to an evidence of coverage, implements HB 1798 and HB 1800 (78 th Legislature), which permit an HMO to deliver plan evidences of coverage electronically, and removes the reference to "standard language" because TDI reviews all forms for compliance. The proposed amendments to that section also change certain provisions relating to the cancellation of an enrollee in a group by clarifying that cancellation cannot be based on health status related factors, consistent with the requirements of the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), P.L. 104-191.

The proposed amendment to §11.506(2)(A) deletes the word "nominal" as an inaccurate description of a 50% copayment. Proposed §11.506(3)(A) is changed to conform to Insurance Code Articles 26.23, 26.86 and HIPAA. Proposed §11.506(3)(B) deletes the 60-day timeframe for prior notice to the group because there are no circumstances under which the 60-day notice would apply. Proposed §11.506(6)(C) clarifies that conversion coverage is an option; the continuation provision is mandatory. Proposed §11.506(9)(E) conforms to Insurance Code Article 20A.09H (to Children and Grandchildren), which refers to "enrollee." Proposed §11.506(10)(D)(i) and (ii) clarify that an HMO must cover enrollees´ emergency medical care services, whether performed by network or out-of-network providers, and indemnify or hold enrollees harmless for the cost of such services. Proposed §11.506(16) implements HB 508 (78 th Legislature) by increasing from 30 to 60 the number of days prior notice an HMO is required to give regarding a group plan premium rate increase. Proposed §11.506(19) increases the age for dependent coverage for a child from 21 to 25 years as required by HB 1446 (78 th Legislature). Throughout proposed §11.506(23) the reference to an enrollee´s choice of an obstetrician is changed from "designated" to "selected." Revised §11.506(25) references Article 21.52J rather than listing its requirements.

Proposed amendments to §11.901(a)(1) add provisions from Subchapter L, §11.1102, which is proposed for repeal elsewhere in this issue of the Texas Register , and contain the language in Insurance Code §843.361 that requires enrollees to be held harmless by a physician or provider for payment of the cost of covered health services if the HMO does not pay the physician or provider for those services. Proposed amendments to §11.901(a)(4) clarify that written notice to enrollees of termination of their physician or provider is governed by Insurance Code §§843.308 and 843.309 and the proposed amendments to §11.901(5) clarify that written notice of termination to a physician or provider is governed by §§843.306 and 843.307. Proposed amendments in §11.901(a)(5)(B) and (C) change the time allowed for a physician or provider to request an appeal of the termination from 60 days to 30 days from the notice of termination. This change will give the review panel enough t ime to review the termination within the 60 days mandated by Insurance Code §843.306(b). Proposed amendments to §11.901(a)(5)(C) require the review panel to review the physician or provider´s termination within 60 days of the physician or provider´s request for review.

Proposed amendments to §11.901(a)(12) add new language required by SB 781 (76 th Legislature), as it amended Insurance Code Article 20A.18A (now §843.311(3)) relating to podiatrists. Proposed amendments to §11.901(a)(13) add language from SB 418 (78 th Legislature), which added Insurance Code Article 21.52Z, §2 relating to electronic health care transactions. Proposed amendments to §11.902(a) add language from HB 606 (77 th Legislature) that added new §18D to Insurance Code Article 20A (now §843.320) relating to hospitalists. Proposed amendments to §11.902(b) and (c) add language from HB 803 (77 th Legislature) that added subsection (o) to Insurance Code Article 20A.14 (now §843.3045) relating to nurse first assistants. Proposed amendments to §11.902(d) add language from HB 1163 (78 th Legislature) that added Insurance Code §843.319 (Certain Required Contracts) relating to podiatrists. Proposed §11.902(e) adds language that implements Insurance Code §843.312 relating to physician assistants and advance practice nurses. Where appropriate, the proposed amendments refer to the statute rather than restating particular statutory requirements.

Proposed amendments to §11.1001 update the contact information for obtaining forms and update form numbers.

The proposed amendment to §11.1302 (a)(1) clarifies that leaving the HMO, rather than leaving a particular plan within the HMO, triggers termination of appointment to the SSC. The proposed amendment to §11.1302 (b) clarifies what constitutes a quorum. It also clarifies the circumstances requiring a majority vote of the total committee membership. The proposed amendment to §11.1302 (c) changes the maximum interval between SSC meetings by providing for a regular annual meeting, rather than quarterly, as presently required, to provide greater scheduling flexibility. The proposed amendments to §11.1302 (d) harmonize the subsection with the Open Meetings Act, remove the provision allowing meetings by telephone conference call, incorporate provisions concerning emergency meetings, and add a provision permitting a majority of members to call a special meeting to allow members other than the chairman to call such a meeting. The proposed amendment to §11.1302 (e) adds the Open Meetings Act reference for notice requirements. The proposed amendment to §11.1302 (f) makes clear that SSC meetings are generally open, and adds language setting out circumstances under which a closed meeting may be held. The proposed amendment to §11.1304(a) clarifies that the written record of SSC proceedings is subject t o pertinent confidentiality laws.

The proposed amendment to §11.1403 updates the toll-free telephone number and updates the agency organizational reference. The proposed amendment to §11.1404(a) reflects present inapplicability of Article 21.52B provisions to the subsection, based on a Fifth Circuit opinion which rendered the article unenforceable.

The proposed amendments to §11.1500 incorporate in substance the federal standards for the term "similarly situated."

The proposed amendments to §11.1600(a) and (b) implement HB 1800 (78th Legislature), which allows HMOs to provide plan descriptions electronically to enrollees and contract holders. Proposed amendments to this section also consolidate notice requirements regarding current and prospective female enrollees´ choice of obstetricians-gynecologists (OB-GYN) and clarify that female enrollees may select an OB-GYN without the requirement for formal designation. They also remove unnecessarily restrictive requirements for the provider directory that are not required by statute. Proposed §11.1600(b)(11)(D) adds the requirement that the HMO provide notice regarding the payment of noncontracted physicians and providers that perform either emergency services or medically necessary covered services due to the unavailability of a participating physician or provider. The proposed amendment to §11.1600(c) clarifies that HMOs are prohibited from making untrue or misleading statements to either current or prospective enrollees. The proposed amendment to §11.1600(d) clarifies that an HMO may use its handbook to satisfy the plan description requirements if it discloses information adequately and in accordance with §11.1600. The proposed amendment to §11.1600(e) requires the plan description to include a disclosure that the enrollee may receive care from a physician other than a primary care physician while in an inpatient facility. While this disclosure is already required in the Evidence of Coverage under §11.506(26) , to ensure awareness of this critical provision, the department has added this requirement to the plan description. Proposed §11.1600(f) implements SB 494 (78th Legislature), which requires HMOs with an internet site to maintain a list of physicians and providers and to provide the same information that is required in a paper directory.

Proposed §11.1601(b) implements SB 418 (78 th Legislature) regarding identification cards that must comply with §21.2820. Proposed §11.1601(c) implements Insurance Code Article 21.53L regarding standards for prescription drug identification cards. Proposed §11.1600(d) implements SB 473 (78 th Legislature), which restricts the use of social security numbers on identification cards. Proposed §11.1605(b), (c), (d) and (e) consolidates all pharmacy services requirements and implements HB 2382 (77 th Legislature) enacting Insurance Code Article 21.52L, which relates to health benefit plan coverage for prescription contraceptive drugs and devices.

Proposed amendments to §11.1606(b) and §11.1606(c), concerning HMO chief executive officer, operations officer and clinical director (presently "medical director"), change the emphasis from full-time status and residence in the service area to detailed functional and practical requirements of the positions. The proposed amendments to §11.1607 consolidate accessibility and availability requirements from Subchapter U, §11.2001 et. seq. The remaining provisions of Subchapter U, which is proposed for repeal elsewhere in this issue of the Texas Register , are being moved to other sections of this rule, and some were changed to comply with certain national and industry standards. Proposed paragraphs (a) - (h) of §11.1607, concerning accessibility and availability requirements, add standards for availability of medical care consistent with national industry standards. Proposed §11.1607(g) specifies availability requirements for urgent behavioral health care, and consistent with the most recent National Committee on Quality Assurance (NCQA) and industry standards, changes the requirement to 48 hours, rather than 24, from time of request. For the same reason, the requirements for availability of routine behavioral health care were changed from three weeks to two weeks. Also consistent with industry standards, the requirements for availability of routine dental care were changed from three weeks to eight weeks, and the availability of p reventive dental health services was changed from two or three months to four months. Proposed §11.1607(h) clarifies that an HMO must have a network that encompasses the entire service area and that access radii are to be measured from current enrollees to providers, not from providers to the boundaries of the service area. This is to clarify the expectation that an HMO have a network that encompasses its entire service area, not just the current enrollee population or area in which the plan is ma rketing.

Proposed §11.1607(i) clarifies that HMOs must not allow balance billing when non-participating providers provide services to enrollees due to unavailability of network services. Proposed §11.1607(j) clarifies that certain health care services, such as transplants or treatment for cancer, burns, or cardiac disease may be provided outside the service area; however, an HMO may not require an enrollee to travel outside of the service area to receive such services unless the HMO provides the enrollee with a written explanation of the benefits and detriments of in-area and out-of-area options. Section 11.1608 is proposed for repeal elsewhere in this issue of the Texas Register because similar OB- GYN notice requirements are included in §11.1600(b)(11).

Current §11.1801(c) is proposed for deletion as it is fully executed. Proposed amendments to §11.1802 prescribe a more comprehensive method for assessing the minimum capital or net worth requirements of a Medicaid MCO and refer to amounts established by statute for required minimum capital and surplus, rather than stating specific amounts in the rule. Obsolete language that was supersede d by §11.809 is proposed to be deleted from paragraph §11.1802(a)(2) and replaced by RBC requirements as the method, developed in coordination with the NAIC, for assessing capital adequacy. The proposed method would be phased in over three years. The proposed amendment to §11.1803(b) clarifies that the deposit is used to protect the interests of the enrollees.

Proposed §11.1804 allows a reduction in the special statutory deposit required for MCOs taking into account certain guarantees from sponsoring organizations. The proposal clarifies that the reduction relates only to the amount of the statutory deposit held under §11.1803 and does not relate to other requirements or unrelated non-Medicaid business. Proposed §11.1806(a) removes the automatic requirement for filing certain financial information with TDI and instead requires the information be filed only upon the department´s request. Proposed §11.1806(b) clarifies that, concurrently with filing a Medicaid participation request with HHSC, Medicaid MCO candidates must file with TDI the financial projections related to that request; it also deletes the term "RFA" because it is not commonly used. Proposed §11.1806(c) clarifies that an MCO must notify TDI of any financial or statistical reports filed with other state agencies, but is not required to file such reports with TDI except upon TDI´s request.

The proposed amendments to the titles of §§11.1901 and 11.1902 clarify that the sections apply to both basic and limited service HMOs. The proposed amendment to §11.1901(c)(1)(B) clarifies that the committee is responsible for reporting to the quality improvement committee (QIC), which in turn is responsible for reporting to the governing body. Proposed amendments throughout §11.1902 are intended to accomplish the following: (1) implement Insurance Code Article 21.58D, as amended by HB 1095 (78 th Legislature), relating to standardized forms for verification of certain credentials including those for advanced practice nurses and physician assistants; (2) fully update credentialing requirements to comply with NCQA standards as required by Insurance Code Article 20A.39; and (3) add requirements relating to initial credentialing site visits and tracking the opening of new offices to comply with NCQA requirements applicable to all primary care physicians and individual primary care providers. Although the NCQA standards do not specifically address primary care dentists, the department has applied those standards, pursuant to the direction of Article 20A.39, to dentists to ensure consistent quality in all areas of health care.

The proposed amendments to §11.1902(2) more accurately state criteria the work plan must meet. The proposed amendments to §11.1902(2)(B) expand updating intervals for those clinical guidelines that change more or less frequently, allow practicing physicians and providers to have input into clinical practice guidelines, and in accord with NCQA requirements, delete the requirement that practice guidelines be communicated to providers in a particular way. The proposed amendment to §11.1902(2)(B)(vi ) clarifies that these provisions apply to individual providers rather than to hospitals. The proposed amendment to §11.1902(2)(B) adds clauses (xi) through (xiii) to include program areas that are essential to any quality improvement (QI) work plan. The proposed amendments to §11.1902(4)(B) add a reference to the provider directory to indicate which physicians and providers must be credentialed, and clarify that hospital-based physicians and providers, if they are not listed in the provider directory, and opticians, would not be required to be credentialed by the HMO. Proposed §11.1902(4)(B)(ii) is necessary to comply with NCQA standards concerning physician and practitioner rights. Proposed §11.1902(4)(B) requires appropriate, timely notice to applicants concerning credentialing and recredentialing to comply with NCQA standards and adds a specific timetable associated with NCQA-required monitoring of certain sanctions. The proposed amendment to §11.1902(4)(B)(viii) provides additional discrimination prohibitions to be included in HMO credentialing and recredentialing procedures to ensure compliance with NCQA requirements and other applicable law. The proposed amendment to §11.1902(4)(C)(iv) clarifies that site visits apply only to individual providers, and more clearly states that the HMO may conduct a single visit to accomplish on-site visit requirements for multiple providers. Proposed §11.1902(4)(D) provides that the items to be gather ed at the time of recredentialing and the recredentialing timeframes are the same as for an original credentialing. The proposed amendment to §11.1902(4)(F) deletes reference to clause (v) because site visits for evaluation are no longer required at the time of recredentialing. Proposed §11.1902(7) restates the provisions for the delegation of credentialing functions from existing §11.1902(4)(B)(vi).

Proposed §11.2207 is adapted from revised Subchapter T to add specific quality improvement requirements for single service HMOs and to formalize consistent department practice to require single service HMOs to have a QI program, consistent with what is required in Subchapter T. In addition, the proposed amendments incorporate the single health care services availability and accessibility requirements from Subchapter U, §11.2006, so that all requirements relating to single service HMOs are contained in one subchapter.

Proposed amendments to §11.2314 add the words "opportunity for" to clarify that under §843.461(a)(1) only notice and an opportunity for a hearing must be available before the commissioner may suspend or revoke a certificate of authority.

Proposed §11.2406 specifies the statutory and regulatory standards for a limited service HMO providing long-term care services and benefits.

Proposed amendments to the subchapters, including Subchapters G, I, R, Z and AA, make editorial or grammatical changes for ease of reading or for clarity; update references to statutory authority; change specific references to more general references to avoid constant updating and revisions; add consistent abbreviations; eliminate redundant or unnecessary wording; and reflect accurate terminology.

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

Ms. Stokes has determined that for each year of the first five years the sections are in effect, the public benefits anticipated as a result of the proposed sections will be a clearer, more efficient, and more standardized process for regulating HMOs, which results in ease of operations and processes for both the industry and enrollees.

Except as provided below, any cost to persons required to comply with these sections for each year of the first five years the proposed sections will be in effect is the result of statutory requirements and not the result of the adoption, enforcement, or administration of the sections.

The proposal concerning the requirements for network configuration maps will ensure accessibility and availability of services. Sections 11.204(18), 11.205(a)(6), 11.302(b)(1), and 11.303(c)(7) require the filing of maps demonstrating the location and distribution of the physician and provider network in order to obtain a certificate of authority, for service area modification requests, and for examinations. While the existing rule requires the filing of information concerning the service area and certain maps, the rule does not specifically require these particular types of maps. Nonetheless, many HMOs currently submit the required information in this format and for those HMOs, this requirement will not require any additional costs. For those that have not submitted this information previously, the anticipated costs for compliance with this requirement will vary depending on a number of factors. Because the rule has for some time required HMOs to provide service area maps for other purposes, most HMOs should already have the software necessary to generate them, or the ability to obtain them. Consequently, the cost for the proposed requirement should relate primarily to the time it takes a programmer to modify a carrier´s existing software to enable it to provide this information. Some commercially available computer mapping programs already include this capability, thus HMOs using these programs would not incur additional cost. Should an HMO choose to perform programming to achieve this goal, the cost will vary depending on whether a carrier employs its own programmers or contracts with independent programmers. According to 2003 data from the U.S. Bureau of Labor Statistics Occupational Employment Statistics Survey, as reported by the Texas Workforce Commission (TWC), the mean hourly rate for a computer programmer in the insurance business is $31.89, and an HMO representative has estimated the rate at $30 per hour. The amount of time necessary to implement system changes wi ll vary greatly depending on the number of hours it will take to program the software, and the HMOs the department surveyed already own commercially available software that includes this capability. The rule does not require computer-generated maps, however, and thus whether an HMO provides maps in this format is its option. An HMO may comply with the proposed requirements with manually-produced maps, so long as they contain the requisite information. The department estimates the cost of materials necessary to provide manually-produced maps at less than $50. While the production of such maps will require some staff time, the proposed requirement is in lieu of the existing rule´s narrative description, so the cost saving from the elimination of this requirement should offset the cost of manually producing a map.

To facilitate review of the information and provide for uniform categorization, the proposed amendments to Subchapters C, §11.205(a)(4) and D, §11.303(c)(4) expand the categories of complaints that the HMO must have available for review upon examination from four to ten. These amendments will facilitate review of complaints during examinations and allow TDI and the industry to more specifically monitor problems and concerns in the face of marketplace changes that could impact enrollees. This may result in additional costs relating to reprogramming complaint categorization. HMO representatives who maintain a local database for logging complaints have estimated that it would take a programmer 30 to 40 hours to implement the necessary changes, at an estimated cost of $30 per hour. A representative of a large HMO that maintains a national database estimates that it would take a programmer 12 months at 173 hours per month to implement the necessary changes. As set forth above, the mean hourly rate for a computer programmer in the insurance business is $31.89. For HMOs that categorize complaints manually, the only additional costs would be related to the personnel time required to re-categorize existing complaint categories. The amount of time involved will depend upon the complexity of the individual HMO´s complaint processing. The cost to the HMO will vary depending upon the types of ind ividual uitilized to oversee this process. The department estimates that the labor costs will average $38.91 per hour of labor. This cost is based upon the 2003 Occupational Wage Data collected by the TWC. The figure represents the average cost, per hour, for an administrative services manager to review existing systems and implement the changes.

The proposal includes a number of changes that will increase the options an HMO may exercise regarding its filings. To eliminate common problems related to form filings, proposed changes to §11.301 contain certain format requirements for filings, including requirements relating to paper size, that the filing not be bound, appearance of type, and inclusion of a printed unique form number and cover page. These requirements reflect changes in technology and will facilitate document storage, and increase efficiency of the department and HMOs. This efficiency will increase effective communication with industry and provide higher quality services to consumers, including enrollees. Legibility and printed text requirements will eliminate the source of past delays resulting from questions regarding handwritten text or numbers. Some HMOs may incur slight costs related to these requirements. For example, an HMO using other than letter sized (8½ by 11 inches) paper for its filings may incur some costs related to its existing stock of other-sized paper, should the HMO be unable to find another use for that paper. The cost to the HMO will depend on the size of its obsolete paper stock. The department estimates the cost of such paper to be approximately $5 per ream. The proposal should offset any additional costs, however, due to the fact that, for all but certain specified filings, the department has reduced the number of copies to be filed from four to three. Prop osed §11.505(f) expands an HMO´s capability to vary language regarding optional provisions and optional benefits in a filing, which should reduce the number of filings an HMO will need to make and thus reduce costs.

Section 11.1600(e) requires that if an HMO or limited provider network provides for enrollee care by physicians other then the enrollee´s primary care physician while the enrollee is in an inpatient facility, the plan description must disclose that fact. A similar disclosure is already required in the evidence of coverage; however, to ensure that all enrollees are informed, the proposal requires that HMOs include the disclosure in the plan description. The proposal also clarifies an HMO´s responsibilities with respect to payment of out-of-network providers in certain circumstances. While this merely clarifies existing law, the notice provisions will enhance the common understanding of these requirements. The proposal includes a new requirement in §11.1600(b)(11)(D) that the list of providers included in the plan description must also include a statement that enrollees must be indemnified or otherwise held harmless when out-of-network providers provide services due to the unavailability of network providers in certain circumstances. In order to comply, HMOs will be required to include these disclosures in all new plan descriptions and must print a plan description addendum and deliver the addendum to all current enrollees.

For plan descriptions given to new enrollees, adding the disclosures to the plan description will not result in additional cost if delivered electronically. For newly-printed disclosures, the HMO should not incur additional cost if the disclosures will fit on an existing page of the plan description. If the HMO needs to print the disclosures and they do not fit on an existing page, the HMO will be subject to the cost of one additional printed sheet of paper, which the department estimates will cost between one and four cents. If an HMO needs to distribute a printed addendum to existing enrollees, it will incur the cost of paper plus the cost of delivery to all existing enrollees, which should not exceed 40 cents per enrollee. The costs associated with delivery of the addendum may include postage or expenses related to facsimile or other electronic transmission. The department allows alternative means of delivery, such as facsimile or other electronic transmission, to reduce the cost of producing and delivering the document. To further reduce costs, an HMO may mail the printed addendum to enrollees along with other materials. The total cost to an HMO will depend on the number of disclosures it needs to print and distribute, and the method it uses for distribution.

T he public benefit anticipated as a result of the proposals concerning solvency standards will be greater protection to the public through a more comprehensive method of assessing minimum capital requirements for MCOs that provide health care services to Medicaid beneficiaries under contracts with HHSC. There is no cost of compliance with the proposed section for MCOs that choose not to pursue a contract with the HHSC. Those MCOs that enter a contract with the HHSC will need to comply with these sections including compliance with new RBC requirements. Requiring this minimum level of RBC is intended to ensure that MCOs do not contract with the state while operating in a potentially hazardous or insolvent financial condition. The department notes that two MCOs have recently been placed into receivership in Texas ; these failures resulted in disruptions in the provision of health care to enrollees and unpaid bills owed to health care providers. An MCO that does not have total adjusted capital equal to or greater than the RBC will have the options of increasing its net worth to comply with the section, or reduce the risks inherent in its operations. If an MCO elects to increase its capital to the amount required by the proposed section, the cost will be phased in over three years, with most of the costs incurred in 2007. The department notes that the proposed final phased-in requirement remains below the "company action level" RBC at which the company should be acting independently to increase its capital.

The proposed changes incorporating standards from the NCQA will provide greater efficiency and standardization for HMOs to comply with the rules, especially those that are required to comply with standards in multiple states. In turn, providers that contract with HMOs will be subject to a uniform and nationally recognized credentialing process and access parameters. The provisions also allow an enrollee more immediate access to routine behavioral health care. Section 11.1607 requires that routine behavioral health care be made available within two weeks of an enrollee´s request for such care. Two-week availability for behavioral health care is an NCQA standard, as well as a general industry standard. Accordingly, HMOs will probably already have a sufficient number of providers to meet this new standard. Should an HMO not have a sufficient number of providers in the network to comply with this standard, the HMO will incur additional expenses related to recruiting, credentialing and contracting with new providers. Individual HMOs have provided the following estimates with regard to cost: $160.00 - $175.00; $250.00; $1100.00; and $1,922.00 per additional provider.

The proposed amendments to §§11.1902(4)(C)(iv) and 11.2207(d)(4) are expected to result in a cost related to the requirement f or initial site visits at new offices opened by primary care dentists. Article 20A.39 requires that departmental rules related to credentialing comply with NCQA standards and specifically requires an HMO, during an initial site visit, to evaluate a site´s accessibility, appearance, space, medical or dental recordkeeping practices, availability of appointments, and confidentiality procedures. While NCQA standards do not specifically address credentialing of dentists, the department believes the NCQA standards are appropriate to the practice of dentistry and their application will provide a consistent standard of quality in health care services. The department believes that these proposed sections are necessary to fulfill the statutory mandate to assure quality; thus any costs resulting from these provisions are the result of that mandate and not this rule. Nevertheless, the department obtained information about costs from several carriers. Based on this information, the cost for single-service dental HMOs to conduct a site visit when a contracted general dentist opens a new practice location would range from $45.00 to $124.00 per visit, depending upon whether an outside vendor or the HMO´s in-house staff conducts the site visit. The number of new general dental practice location openings which would necessitate a site visit ranges from 4 - 22 per year.

Ms. Stokes has determined that the costs of compliance with those parts of the proposal that are not mandated by statute would be the same for HMOs that are large, small or micro-businesses. However, to the extent that the rule allows HMOs the flexibility to use different means to meet the rules' requirement, small or micro-businesses can take advantage of the most cost-efficient methods. For example, an HMO can choose whether to purchase computer mapping software, or can use a hand-drawn map. HMOs of every size also use varying means of obtaining information from dental providers who open new offices, i.e., by contract amendment, notice that may be mailed with other notices, or by other means. The department has solicited input from HMOs as to the appropriate compliance date for the proposed requirement for complaint categorization. It would be neither legal nor feasible to waive the rules' requirements for HMOs that are small or micro-businesses, as doing so would be contrary to standardizations contained in the proposal and could result in different efficiencies for HMOs and their enrollees.

To be considered, written comments on the proposal must be submitted no later than 5:00 p.m. on December 13, 2004 to Gene C. Jarmon, General Counsel and Chief Clerk, Mail Code 113-2A, Texas Department of Insurance, P. O. Box 149104 , Austin , Texas 78714-9104 . An additional copy of the comment must be simultaneously submitted Kim Stokes, Senior Associate Commissioner for the Life, Health & Licensing Program, Mail Code 107-2A, Texas Department of Insurance, P.O. Box 149104 , Austin , Texas 78714-9104 .

The department will consider the adoption of the proposed amendments and new sections in a public hearing under Docket Number 2606, scheduled for 9:30 a.m. , on December 9, 2004 , in Room 100 of the William P. Hobby, Jr. State Office Building, 333 Guadalupe Street , Austin , Texas .

The amendments and new sections are proposed pursuant to Insurance Code §§843.080, 843.082, 843.083, 843.102, 843.151, and 843.404; Articles 20A.09N, 20A.18C, 20A.39, 21.53D (Obstetrical care), 21.53F (Children´s benefits), 21.53F (Telemedicine), 21.53K, 21.53L, 21.53M, 21.58D, 26.04, and §36.001. Section 843.080 provides that the commissioner may promulgate reasonable rules that the commissioner considers necessary for the proper administration of Chapter 843 to require a health maintenance organization, after receiving its certificate of authority, to submit modifications or amendments to the operations or documents described in §§843.078 and 843.079 to the commissioner, for the commissioner's approval or only to provide information, before implementing the modification or amendment or to require the health maintenance organization to indicate the modifications to the commissioner at the time of the next site visit or examination. Section 843.082 sets out the determinations the commissioner must make prior to granting a certificate of authority to an HMO. Section 843.083 sets out the notification and deficiency specification requirements for plan applications whose defects preclude issuance of a certificate of authority. Section 843.102 provides that the commissioner by rule may establish minimum standards and requirements for the quality assurance programs of HMOs, including standards for ensuring availability, accessibility, quality and continuity of care. Section 843.151 provides that the commissioner may adopt reasonable rules as necessary and proper to implement Chapters 843 and 20A, including rules to p rescribe authorized investments for a health maintenance organization for all investments not otherwise addressed in Chapter 843; to ensure that enrollees have adequate access to health care services; to establish minimum physician-to-patient ratios, mileage requirements for primary and specialty care, maximum travel time, and maximum waiting time for obtaining an appointment; and to meet the requirements of federal law and regulations. Section 843.404 provides that the commissioner may adopt rules or may by rule establish guidelines requiring a health maintenance organization to maintain a specified net worth based on the nature and kind of risks the health maintenance organization underwrites or reinsures; the premium volume of risks the health maintenance organization underwrites or reinsures; the composition, quality, duration, or liquidity of the health maintenance organization's investment portfolio; fluctuations in the market value of securities the health maintenance organization holds; the adequacy of the health maintenance organization's reserves; the number of individuals enrolled by the health maintenance organization; or other business risks. Article 20A.09N(j) provides the commissioner shall adopt rules as necessary to implement provisions of HMO choice of benefits plans. Article 20A.18C(r) provides that the commissioner shall adopt reasonable rules to implement the article as it relates to delegation of certain functions by an HMO. Article 20A.39(a) provides that rules adopted by the commissioner under §843.102 that relate to implementation and maintenance by an HMO of a process for selecting and retaining affiliated physicians and providers to comply with provisions of Article 20A.39 and standards promulgated by the National Committee for Quality Assurance, to the extent those standards do not conflict with other laws of this state. Article 21.53D, §6, provides the commissioner shall adopt rules as necessary to implement obstetrical/gynecological care provisions. Article 21.53F, addressing children´s benefits, provides in Section 7 the commissioner may adopt rules as necessary to implement children´s benefits provisions in the article. Article 21.53F, addressing telemedicine, provides in Section 6 the commissioner may adopt rules necessary to implement the article. Article 21.53K, §2, provides the commissione r may adopt rules to implement the article. Article 21.53L, §4, provides that the commissioner shall adopt necessary rules to implement pharmacy benefit card provisions of the article. Article 21.53M, §4, provides the commissioner may adopt rules to implement the off-label drug coverage provisions of the article. Article 21.58D provides the commissioner shall by rule adopt a standardized form for verification of credentials of professionals named in the statute and shall consider any credentialing application form widely used in the state or by the department. Article 26.04 provides that the commissioner shall adopt rules as necessary to implement Insurance Code 26 and to meet the minimum requirements of federal law and regulations which, for large and small employer health carriers, are contained in HIPAA. Section 36.001 provides that the Commissioner of Insurance may adopt any rules necessary and appropriate to implement the powers and duties of the Texas Department of Insurance under the Insurance Code and other laws of this state.

The proposed amendments and new sections affect regulation pursuant to the following statutes:

Insurance Code, Chapters 843, 844 and 20A, Articles 1.15, 1.16, 1.19, 1.61 3.10, 21.21, 21.21-1, 21.21-2, 21.21-6, 21 .52J, 21.52L, 21.53D (Obstetrical), 1.1001,21.53F (Telemedicine), 21.53F, (Children´s Benefits), 21.53K, 21.53L, 21.53M, 21.58A, 21.58D, 26.08, 26.71, and §822.203; Business and Commerce Code, §35.58; Occupations Code, §§162.001, 301.152, 301.1525 and 554.004; 42 U.S.C. §1396(b); and 42 CFR, Chapter 146

SUBCHAPTER A. General Provisions

§11.1. Purpose[and Scope]. This chapter implements 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, Chapters [ Chapter ] 20A and 843 .

(1) ­ (2) (No change.)

(3) Violation of rules. A violation of the lawful rules[ , regulations, ] or orders of the commissioner made pursuant to this chapter constitutes a violation of the Texas Health Maintenance Organization Act.

§11.2. Definitions.

(a) The definitions found in the Texas Health Maintenance Organization Act, Texas Insurance Code §843.002, are [ hereby ] incorporated into 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) ­ (4) (No change.)

(5) Agent-- A person who may act as an agent for the sale of a health benefit plan under a license issued under Insurance Code Chapter 21 [ As defined in the Insurance Code Articles 21.07-1, §1(b), unless the context of the rule indicates applicability to any agents licensed under one specific article ].

(6) ­ (9) (No change.)

(10) Clinical director--A health professional who meets the following criteria:

(A) is appropriately licensed;

(B) is an employee of, or party t o a contract with, a health maintenance organization; and

(C) is responsible for clinical oversight of the utilization review program, the credentialing of professional staff, and quality improvement functions.

(11) [ (10) ] Code--The Texas Insurance Code.

(12) [ (11) ] Consumer choice health benefit plan--A health benefit plan authorized by Insurance Code Article 3.80 or Article 20A.09N. [ offered by an HMO, as described in Subchapter AA of Chapter 21 of this title (relating to Consumer Choice Health Benefit Plans); ]

(13) [ (12) ] Contract holder--An individual, association, employer, trust or organization to which an individual or group contract for health care services has been issued.

(14) [ (13) ] Control--As defined in [ the ] Insurance Code §§823.005 and 823.151.

(15) [ (14) ] Controlled HMO--An HMO controlled directly or indirectly by a holding company.

(16) [ (15) ] Controlled person--Any person, other than an HMO, who is controlled directly or indirectly by a holding company.

(17) [ (16) ] Copayment--A charge in addition to premium to an enrollee for a service which is not fully prepaid.

(18) [ (17) ] Credentialing--The process of collecting, assessing, and validating qualifications and other relevant information pertaining to a physician or provider to determine eligibility to deliver health care services.

(19) [ (18) ] Dentist--An individual provider licensed to practice dentistry by the Texas State Board of Dental Examiners.

(20) [ (19) ] General hospital--A licensed establishment that:

(A) offers services, facilities, and beds for use for more than 24 hours for two or more unrelated individuals requiring diagnosis, treatment, or care for illness, injury, deformity, abnormality, or pregnancy; and

(B) regularly maintains, at a minimum, clinical laboratory services, diagnostic X-ray services, treatment facilities including surgery or obstetrical care or both, and other definitive medical or surgical treatment of similar extent.

(21) [ (20) ] HMO--A health maintenance organization as defined in Insurance Code §843.002(14).

(22) [ (21) ] Health status related factor--Any of the following in relation to an individual:

(A) health status;

(B) medical condition (including both physical and mental illnesses);

(C) claims experience;

(D) receipt of health care;

(E) medical history;

(F) genetic information;

(G) evidence of insurability (including conditions arising out of acts of domestic violence, including family violence as defined by [ the ] Insurance Code Article 21.21-5); or

(H) disability.

(23) [ (22) ] Individual provider--Any person, other than a physician or institutional provider, who is licensed or otherwise authorized to provide a health care service. Includes, but is not limited to, licensed doctor of chiropractic, dentist, registered nurse, advanced practice nurse, physician assistant, pharmacist, optometrist, registered optician, and acupuncturist.

(24) [ (23) ] Institutional provider--A provider that is not an individual. Includes any medical or health related service facility caring for the sick or injured or providing care or supplies for other coverage which may be provided by the HMO. Includes but is not limited to:

(A) General hospitals,

(B) Psychiatric hospitals,

(C) Special hospitals,

(D) Nursing homes,

(E) Skilled nursing facilities,

(F) Home health agencies,

(G) Rehabilitation facilities,

(H) Dialysis centers,

(I) Free-standing surgical centers,

(J) Diagnostic imaging centers,

(K) Laboratories,

(L) Hospice facilities,

(M) Infusion services centers,

(N) Residential treatment centers,

(O) Community mental health centers,

(P) Urgent care centers, and

(Q) Pharmacies.

(25) [ (24) ] Limited provider network--A subnetwork within an HMO delivery network in which contractual relationships exist between physicians, certain providers, independent physician associations and/or physician groups which limit the enrollees' access to only the physicians and providers in the subnetwork.

(26) [ (25) ] Limited service HMO--An HMO which has been issued a certificate of authority to issue a limited health care service plan as defined in [ the ] Insurance Code §843.002.

(27) [ (26) ] NAIC--National Association of Insurance Commissioners.

(28) [ (27) ] Out of area benefits--Benefits that the HMO covers when its enrollees are outside the geographical limits of the HMO service area.

(29) [ (28) ] Pathology services--Services provided by a licensed laboratory which has the capability of evaluating tissue specimens for diagnoses in histopathology, oral p athology, or cytology.

(30) [ (29) ] Pharmaceutical services­Services, including dispensing prescription drugs, under the Pharmacy Act, Occupations Code, Subtitle J [ Chapter 551 ], that are ordinarily and customarily rendered by a pharmacy or pharmacist.

(31) [ (30) ] Pharmacist--An individual provider licensed to practice pharmacy under the Pharmacy Act, Occupations Code, Subtitle J [ Chapter 551 ].

(32) [ (31) ] Pharmacy--A facility licensed under the Pharmacy Act, Occupations Code, Subtitle J [ Chapter 551 ].

(33) [ (32) ] Premium-- All amounts payable by a small or large employer and eligible employees as a condition of receiving coverage from a small or large employer carrier, including any fees or other contributions associated with a health benefit plan [ The prospectively determined rate that is paid by or on behalf of an enrollee for specified health services ].

(34) [ (33) ] Primary care physician or primary care provider--A physician or individual provider who is responsible for providing initial and primary care to patients, maintaining the continuity of patient care, and initiating referral for care.

(35) [ (34) ] Primary HMO--An HMO that contracts directly with, and issues an evidence of coverage to, individuals or organizations to arrange for or provide a basic, limited, or single health care service plan to enrollees on a prepaid basis.

(36) [ (35) ] Provider HMO--An HMO that contracts directly with a primary HMO to provide or arrange to provide health care services on behalf of the primary HMO within the primary HMO's defined service area.

(37) [ (36) ] Psychiatric hospital--A licensed hospital which offers inpatient services, including treatment, facilities and beds for use beyond 24 hours, for the primary purpose of providing psychiatric assessment and diagnostic services and psychiatric inpatient care and treatment for mental illness. Such services must be more intensive than room, board, personal services, and general medical and nursing care. Although substance abuse services may be offered, a majority of beds must be dedicated to the treatment of mental illness in adults and/or children.

(38) [ (37) ] Qualified HMO--An HMO which has been federally approved under Title XIII of the Public Health Service Act, Public Law 93-222, as amended.

(39) [ (38) ] Quality improvement (QI) --A system to continuously examine, monitor and revise processes and systems that support and improve administrative and clinical functions.

(40) [ (39) ] RBC--Risk-based capital.

(41) [ (40) ] RBC formula--NAIC risk-based capital formula.

(42) [ (41) ] RBC Report--Health Risk-Based Capital Report including Overview and Instructions for Companies published by the NAIC and adopted by reference in §11.809 of this title (relating to Risk-Based Capital for HMOs and Insurers Filing the NAIC Health Blank).

(43) [ (42) ] Recredentialing--The periodic process by which:

(A) qualifications of physicians and providers are reassessed;

(B) performance indicators, including utilization and quality indicators, are evaluated; and

(C) continued eligibility to provide services is determined.

(44) [ (43) ] Reference laboratory--A licensed laboratory that accepts specimens for testing from outside sources and depends on referrals from other laboratories or entities. HMOs may contract with a reference laboratory to provide clinical diagnostic services to their enrollees.

(45) [ (44) ] Reference laboratory specimen procurement services--The operation utilized by the reference laboratory to pick up the lab specimens from the client offices or referring labs, etc. for delivery to the reference laboratory for testing and reporting.

[ (45) Referral specialists (other than primary care)--Physicians or individual providers who set themselves apart from the primary care physician or primary care provider through specialized training and education in a health care discipline. ]

(46) - (49) (No change.)

(50) Specialists--Physicians or individual providers who set themselves apart from the primary care physician or primary care provider through specialized training and education in a health care discipline.

(51) [ (50) ] State-mandated health benefit plan-- As defined in §21.3502 of this title (relating to Definitions) [ A health plan offered by an HMO, that contains coverage for all state-mandated benefits, including those as described in §§21.3515-21.3518 of this title (relating to State-mandated Health Benefits in Individual HMO Plans, State-mandated Health Benefits in Group HMO Plans, State-mandated Health Benefits in Small Employer HMO Plans, and State-mandated Health Benefits in Large Employer HMO Plans) and offers basic health care services without limitation as to time and cost ].

(52) [ (51) ] Statutory surplus--Admitted assets minus accrued uncovered liabilities.

(53) [ (52) ] Subsc riber--If conversion or individual coverage, the individual who is the contract holder and is responsible for payment of premiums to the HMO; or if group coverage, the individual who is the certificate holder and whose employment or other membership status, except for family dependency, is the basis for eligibility for enrollment in the HMO.

(54) [ (53) ] Subsidiary--An affiliate controlled by a specified person directly or indirectly through one or more intermediaries.

(55) [ (54) ] Telehealth service--As defined in Section 57.042, Utilities Code.

(56) [ (55) ] Telemedicine medical service--As defined in Section 57.042, Utilities Code.

(57) [ (56) ] Total adjusted capital--An HMO's statutory capital and surplus/total net worth as determined in accordance with the statutory accounting applicable to the annual financial statements required to be filed pursuant to the Insurance Code, and such other items, if any, as the RBC instructions provide.

(58) [ (57) ] Urgent care--Health care services provided in a situation other than an emergency which are typically provided in a setting such as a physician or individual provider's office or urgent care center, as a result of an acute injury or illness that is severe or painful enough to lead a prudent layperson, possessing an average knowledge of medicine and health, to believe that his or her condition, illness, or injury is of such a nature that failure to obtain treatment within a reasonable period of time would result in serious deterioration of the condition of his or her health.

(59) [ (58) ] Utilization review--A system for prospective or concurrent review of the medical necessity and appropriateness of health care services being provided or proposed to be provided to an individual within this state. Utilization review shall not include elective requests for clarifi cation of coverage.

(60) [ (59) ] Voting security--As defined in [ the ] Insurance Code §823.007, including any security convertible into or evidencing a right to acquire such security.

SUBCHAPTER B Name Application Procedure

§11.101. How To Obtain Forms. The name application form and all other HMO forms may be obtained by contacting the Company Licensing and Registration [Insurer Services ] Division , Mail Code 305-2C, Texas Department of Insurance, P.O. Box 149104 , Austin , Texas 78714-9104.

SUBCHAPTER C. Application for Certificate of Authority

§11.201. Filing Fee. The filing fee required by [ the ] Insurance Code §843.154 [ Article 20A.32(a) ], as determined by §7.1301 of this title (relating to Regulatory Fees), must accompany the application. The fee is non-refundable.

§11.202 . Binding, Indexing, and Numbering Requirements.

(a) An original [ and four complete copies ] of the application must be submitted in one or more three-ring binders , so that pages may be easily replaced when necessary.

(b) ­ (e) (No change.)

(f) The original [ copy of the ] application becomes the charter file[ ; therefore, all signatures on required forms in the original copy must be originals, not photocopies].

(g) ­ (h) (No change.)

§11.203. Revisions during Review Process.

(a) Revisions during the review of the application must be addressed to: Company Licensing and Registration [ Insurer Services ] Division, Mail Code 305-2C, Texas Department of Insurance, P.O. Box 149104 , Austin , Texas 78714-9104 . The applicant must include an original [ and four copies ] of the transmittal letter, plus the original [ and four copies ] of any revision specified in this subchapter.

(b) ­ (c) (No change.)

(d) Staff shall conduct qua lifying examinations and notify the applicant of the need for revisions necessary to meet the requirements of the Act or this chapter. If the applicant does not make the necessary revisions, the department shall deny the application. [ If, after the department's qualifying examinations, the department staff notifies the applicant of the need for revisions as a result of the examination, that application does not meet the requirements of the Act or this chapter and will have to be denied, absent corrections. ] If the time required for the revisions will exceed the time limits set out in §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 at his or her discretion under §1.809 of this title. Additional extensions may be requested. The request for any additional extension must set out the need for the additional time, in writing, in sufficient detail for the commissioner to determine if good cause for the extension exists. The commissioner may grant or deny any additional request for an extension of time at his or her discretion.

§11.204. Contents. Contents of the application must include the [ following ] items in the order listed in this section. The applicant must submit two additional copies of the application along with the original application. [ : ]

(1) ­ (3) (No change.)

(4) the bylaws, rules[ and regulations ], or any similar document regulating the conduct of the internal affairs of the applicant;

(5) ­ (6) (No change.)

(7) fidelity bond or deposit for officers and employees, which must comply with either subparagraph (A) or (B) of this paragraph, as appropriate.

(A) A bond must be in compliance with [ the ] Insurance Code §843.402 [ Article 20A.30 ], and must be either the original bond or a copy of the bond. The bonds shall not contain a deductible.

(B) A cash deposit must be held by the Comptroller of the State of Texas 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 must be submitted by using the attorney for service form.

(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 an agent for service, other than the commissioner 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 HMO on a cause of action arising in this state is valid if served in accordance with [ the ] Insurance Code Chapter 804 [ Article 1.36 ].

(9) ­ (12) (No change.)

(13) [ a copy of ] the form of any contract or monitoring plan between the applicant and:

(A) any person listed on the officers and directors page;

(B) any physician, medical group, [ or ] association of physicians, delegated entity, as described in Insurance Code Article 20A.18C, delegated network, as described in Insurance Code Article 20A.18D, or any other provider, plus [ a copy of ] the form of any subcontract between such entities and [ 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. All contracts shall include a hold-harmless provision, as specified in §11.901(a)(1) [ §11.1102 ] of this title (relating to Required Provisions [ Hold-Harmless Clause ]). Such clause shall be no less favorable to enrollees than that outlined in §11.901(a)(1) [ §11.1102 ] of this title.

(C) any exclusive agent or agency;

(D) any person who will perform management, marketin g, administrative, data processing services, or claims processing services. A bond or deposit meeting the requirements of [ the ] Insurance Code §843.105 [ Article 20A.18 ], is required for management contracts. If submitting a bond, the original or a copy shall be submitted. The bond shall not include a deductible;

(E) ­ (F) (No change.)

(14) a description of the quality improvement [ assurance ] program that includes a process for medical [ , including a ] peer review [ program ] required by [ the ] Insurance Code §843.082 [ , 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, guarantees, and other protection against insolvency:

(A) any reinsurance agreement and any other agreement described in [ the ] Insurance Code §843.082(4)(C) [ Article 20A.05(a)(4)(C) ], 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) ­ (C) (No change.)

(16) (No change.)

(17) the written description of health care plan terms and conditions made available to any current or prospective group contract holder and current or prospective enrollee of the HMO pursuant to the requirements of [ the ] Insurance Code §§843.078 and 843.079 [ Article 20A.04(13) ] and §11.1600 of this title (relating to Information to Prospective and Current Group Contract Holders and Enrollees);

(18) network configuration information, including maps demonstrating [ an explanation of ] the location and distribution [ adequacy ] of the physician , dentist and [ other ] provider network within the proposed service area by county(ies) or ZIP code(s) [ configuration ]; lists of physicians, dentists and individual providers, including license type and specialization and an indication of whether they are accepting new patients, and institutional providers [ the information provided must include the names of primary care physicians, their hospital affiliations, referral specialists, and other providers by zip code or zip code map and indicate whether each physician or other provider is accepting new patients from the HMO ];

(19) (No change.)

(20) documentation demonstrating that the HMO will pay for emerg ency care services performed by non-network physicians or providers at the negotiated or usual and customary rate and that the health care plan contains, without regard to whether the physician or provider furnishing the services has a contractual or other arrangement with the entity to provide items or services to enrollees, the following provisions and procedures for coverage of emergency care services:

(A) any medical screening examination or other evaluation required by state or federal law which is necessary to determine whether an emergency medical condition exists will be provided to enrollees in a hospital emergency facility or comparable facility;

(B) necessary emergency care services will be provided to enrollees, including the treatment and stabilization of an emergency medical condition; and

(C) services originating in a hospital emergency facility or comparable facility following treatment or stabilization of an emergency medical condition will be provided to covered enrollees as approved by the HMO, provided that the HMO is required to approve [ approved] or deny coverage of post stabilization care as requested by a treating physician or provider within the time appropriate to the circumstances relating to the delivery of the services and the condition of the patient, but in no case to exceed one hour from the time of the request; the HMO must respond to inquiries from the treating physician or provider in compliance with this provisio n in the HMO's plan.

(21) a description of the procedures by which:

(A) a member handbook and materials relating to the complaint and appeal process and the [ availability of the ] independent review process will be provided to enrollees in languages [ any language ] other than English, pursuant to [ the ] Insurance Code §843.205 [ Article 20A.11A(a) ]; and

(B) access to a member handbook and materials relating to the complaint and appeal process and the [ availability of the ] independent review process will be provided to an enrollee w ho has a disability affecting communication or reading [ the enrollee's ability to communicate or to read ], pursuant to [ the ] Insurance Code §843.205 [ Article 20A.11A(b) ] .

(22) notification of the physical address in Texas of all books and records described in §11.205 of this title (relating to Documents To Be Available for Qualifying [ During ] Examinations);

(23) a description of the information systems , management structure and personnel that demonstrates the applicant& acute;s capacity to meet the needs of enrollees and contracted physicians and providers, and to meet the requirements of regulatory and contracting entities [ in place which demonstrates the applicant has adequate capacity to service enrollees, physicians and providers ]; and

(24) (No change.)

§11.205 . Documents To Be Available for Qualifying [ during ] Examinations.

(a) The following documents must be available for review [ maintained for inspection at all times ] at th e HMO's office located within the State of Texas :

(1) administrative : policy and procedure manuals; physician and provider manuals ; enrollee materials [ information; enrollee newsletters; personnel manuals ]; organizational charts; key personnel information, e.g., resumes and job descriptions [ contracts with physicians and, if applicable, providers such as dentists and physician therapists ]; and other items as requested [ required ];

(2) [ the ] quality improvement : program description and work plan as required by §11.1902 of this title (relating to Quality Improvement Program for Basic and Limited Services HMOs) [ review standards, quality improvement committee meeting minutes, internal quality review audits of each defined service area, quality of care assurance program description, medical peer review committee minutes, and utilization review system program description, including policies and procedures to evaluate medical necessity, criteria used, information sources, the process used to review and approve the provision of medical services and utilization review system data ];

(3) utilization management: program description, policies and procedures, criteria used to determine medical necessity, and examples of adverse determination letters, adverse determination logs, and IRO logs;

(4) [ (3) ] complaints and appeals: policies [ the complaint policy ] and procedures, examples of letters and examples of complaint and appeal logs [ procedure and forms to be used in the complaint resolution procedure ]. Each complaint [ All complaints ] shall be categorized as one or more of the following types of complaint: [ processed in accordance with the HMO's complaint policy and procedure which shall be developed in accordance with the Insurance Code Chapter 20A. ]

(A) quality of care or services;

(B) accessibility/availability of services;

(C) u tilization review or management;

(D) complaint procedures;

(E) physician and provider contracts;

(F) group subscriber contracts;

(G) individual subscriber contracts;

(H) marketing;

(I) claims processing; and

(J) miscellaneous;

[ (4) the accessibility monitoring data; ]

[ (5) the enrollee satisfaction surveys, results of surveys and disenrollment and termination logs; ]

(5) [ (6) ] health information systems: policies and procedures [ a system ] for accessing enrollee [ medical, hospital and ] health records [ of all enrollees and records of all physicians and othe r providers providing service under independent contract with an HMO shall be subject to such examination as is necessary for an ongoing examination. The ] and a plan to [ shall ] provide for [ adequate protection of ] confidentiality of those records [ medical and health care information and shall only be disclosed ] in accordance with applicable law;

(6) [ (7) ] network configuration information , < u> as outlined in §11.204(18) of this title (relating to Contents) demonstrating [ including an explanation of the ] adequacy of the physician, dentist and [ other ] provider network [ configuration. The information provided must include the names of physicians, referral specialists, and other providers by zip code or zip code map, and indicate whether each physician or other provider is accepting new patients from the HMO ];

[(8) lists of primary care and referral specialists, hospitals, laboratories, diagnostic imaging providers, radiologic oncology providers, and, if applicable, other providers such as dentists and physical therapists to be used by the applicant inside the service area, including their certification/accreditation and trauma level status as applicable; ]

(7) executed agreements, including:

(A) management services agreements;

(B) administrative services agreements; and

(C) delegation agreements;

(8) executed physician and provider contracts: copy of the first page, including the form number, and signature page of individual provider contracts and group provider contracts;

(9) executed subcontracts: copy of the first page, including the form number, and signature page of all contracts with subcontracting physicians and providers; [ current files containing the form or template of all contracts, with copies of signature pages, for all participating physicians and, if applicable, other providers of care such as dentists and physical therapists that are updated on an ongoing basis; ]

[ (10) current files containing the form or template of all contracts, with copies of signature pages, on subcontracting physicians and, if applicable, providers such as dentists and physical therapists which contain sufficient information to assure current licensure or other authorizations to practice in the State of Texas ; ]

[ (11) evidence that the HMO has a mechanism for maintaining, monitoring and implementing the quality improvement program, as required by §11.1902 of this title (relating to Quality Improvement Program) including procedures for data collection, analysis and reporting for all physicians and providers, including pharmacy or drug utilization review format, if applicable; utilization review; denials of coverage and a complaint system as required by this chapter; ]

(10) [ (12) ] current physician manual and current provider manual which shall be provided to each contracting physician and other provider. The manuals shall contain details of the requirements by which the physicians and providers will be governed ; [ . ]

(11) [ (13) ] credentialing files : as specified in §11.1902(4) [ §11.1902(5) ] of this title (relating to Quality Improvement Program for Basic and Limited Services HMOs) and §11.2207(d)(4) of this title (relating to Quality Improvement Structure and Program for Single Service HMOs) ;

(12) [ (14) ] a copy of all printed materials to be presented to prospective enrollees, an enrollee handbook, and an evidence of coverage [ and physician and provider manuals ];

(13) [ (15) ] the statistical reporting system developed and maintained by the HMO which allows for compiling, developing, evaluating, and reporting statistics relating to the cost of operation, the pattern of utilization of services, and the accessibility and availability of services;

[ (16) the HMO's financial statements; ]

[ (17) any report submitted by the HMO to the Texas Health Care Information Council; ]

[ (18) all complaints and complaint files; ]

[ (19) documentation of regular review of complaint reports by management and the governing body; ]

[ (20) the complaint and appeal log, including documentation on each complaint received and details of action taken on the complaint. Complaints and appeals must be categorized as follows: ]

[ (A) plan administration (e.g., marketing, policyholder service, billing, underwriting or similar administrative functions); ]

[ (B) benefit denial or limitation (e.g., denial of a benefit, refusal to refer or provide requested services); ]

[ (C) quality of the treating physician, dentist or provider care (e.g., misdiagnoses or lack of courteous treatment); ]

[ (D) enrollee services (e.g., lack of courteous treatment; appointment time or waiting room time); ]

[ (21) access to appointments (e.g., appointment time or waiting room time); ]

(14) claims sy stems: policies and procedures that demonstrate the capacity to pay claims timely and to comply with all applicable statutes and rules;

(15) [ (22) ] financial records : [ , ] including statements, ledgers, checkbooks, inventory records, evidence of expenditures, investments and debts; and

(16) [ (23) ] any other records demonstrating compliance with applicable statutes and rules, including audits or examination reports by other entities, including governmental authorities or accrediting agencies [ concerning the operation of the HMO ].

(b) The following documents may be maintained outside the State of Texas if the HMO has received prior approval by the commissioner pursuant to [the] Insurance Code §803.003 [Article 1.28]:

(1) ­ (5) (No change.)

§11.206. Review of Application.

(a) ­ (b) (No change.)

(c) Following the completion of the qualifying examinations, if a hearing is scheduled, then it will be scheduled under the provisions of [the] Insurance Code §843.081 [Article 20A.05]. The hearing may be waived, if agreed to by the applicant and the department and if no reasonable request for a hearing by any other person has been received.

SUBCHAPTER D. Regulatory Requirements For an HMO Subsequent to Issuance of Certificate of Authority.


§11.301. Filing Requirements. Subsequent to the issuance of a certificate of authority, each 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 §11.302 of this title (relating to Service Area Expansion or Reduction Applications [ Requests ]). These requirements include filing changes necessitated by federal or state law or regulations.

(1) Completeness and format of filings.

(A) The department shall not accept a filing for review until the filing is complete. An application to modify the approved application for a certificate of authority which requires the commissioner's approval in accordance with [ the ] Insurance Code §843.080 [ , Articles 20A.04(b)] and Article 20A.09(l) is considered complete when all information required by this section, §11.302 of this title, and §§11.1901 - 11.1902 [ §§11.1901 ­ 11.1903 ] of this title (relating to Quality of Care) that is applicable and reasonably necessary for a final determination to be made by the department, has been filed [ with the department ].

(B) Filings shall:

(i) be submitted on 8-1/2 by 11 inch paper;

(ii) not be submitted in bound booklets;

(iii) be legible;

(iv) be in typewritten, computer generated, or printer´s proof format; and

(v) except for maps, not contain any color highlighting unless accompanied by a clean copy without highlighting.

(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 printed unique form number, adequate to distinguish it from other items. Such identifying form numbers shall be composed of a total of no more than 40 letters, numbers, symbols, and spaces.

(A) ­ (B) (No change.)

(3) Attachments for filings. The filings required in paragraphs (4) and (5) of this section must be accompanied by the following:

(A) one [ an ] original [ and four copies ] of the HMO certification and transmittal form for each new, revised, or replaced item;

(B) one [ an ] original [ and four copies ] of such supporting documentation as considered necessary by the commissioner for review of the filing , along with a cover letter which includes the following: [ ; and ]

(i) company name;

(ii) form numbers that are being submitted; and

(iii) a paragraph that describes the type of filing being submitted, along with any additional information that would aid in processing the filing.

(C) except for the filings outlined in paragraphs (4)(A), (B), and (L), and (5)(C), (G), (K), (M) , and (N) of this section, the applicable filing fee for other filings as required by Insurance Code §843.154 [ Article 20A.32 ], as determined by §7.1301 of this title (relating to Regulatory Fees). The [ fee(s) for ] filings outlined in paragraphs (4)(A), (B), and (L), and (5)(C), (G), (K), (M) , and (N) of this section are subject to the fee amounts described in §7.1301(g) of this title, but such fees shall not be attached with the filing. Instead, the submission of such fee(s) is subject to the billing provisions of §7.1302 of this title (relating to Billing System).

(4) Filings requiring approval. Subsequent to the issuance of a certificate of authority, each HMO shall file for approval with the commissioner information required by any amendment to items specified in §11.204 of this title ( relating to Contents) if such information has not previously been filed and approved by the commissioner. In addition, 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 §11.204(13)(A) , (C) and (D) [ (C) ] of this title, including any amendments to contracts described in §11.204(13)(A) , (C) and (D) [ (C) ] of this title and prior notification of the cancellation of any management contracts in §11.204(13)(D) of this title;

(D) any change in more than 10% of control of the HMO, as specified in the definition of "control" in §11.2(b) [ §11.2(b)(11) ] of this title (relating to Definitions);

(E) ­ (F) (No change.)

(G) any new or revised loan agreements, or amendments thereto, evidencing loans made by the HMO to any affiliated person or to any medical or other health care provider, whether providing services currently, previously, or potentially in the future; and any guarantees of any affiliated person's or health care provider's obligations to any third party ;

(H) ­ (M) (No change.)

(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 certification and transmittal form 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, 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 ] Insurance Code §843.078(b) [ , Article 20A.04(a)(3) ], on the officers and directors page and biographical affidavit forms in §11.204(5)(A) and (B) of this title;

(B) a copy of any notice of cancellation of fidelity bonds, new fidelity bonds, or amendments thereto, for officers and employees, including notarized certification by the corporate secretary or corporate president that the material is true, accurate, and complete, as described in §11.204(7) and (13)(D) of this title;

(C) the formula or method for calculating the s chedule of charges, as defined in §11.2(b) of this title . The filing must include the HMO reconciliation of benefits to schedule of charges form as described in §11.701 of this title (relating to Must be Filed Prior to Use) ;

(D) any change in the physical address of the books and records described in §11.205 of this title (relating to Documents To Be Available for Qualifying [ During ] Examinations);

(E) ­ (F) (No change.)

(G) a copy of the form of any new contract or subcontracts or any substantive changes to previously filed copies of forms of all contracts between the HMO and any physicians , delegated entities and delegated networks as defined in §11.2602 of this title (relating to Delegated Entities), or other providers described in §11.204(13)(B) of this title, and copies of forms of all contracts between the HMO and an insurer or group hospital service corporation to offer indemnity benefits, whether utilized with all contracts or on an individual basis. If such contracts are amended, each copy of such agreement must be marked to indicate revisions. In addition, questions listed on the HMO certification and transmitt al form, must be answered;

(H) (No change.)

(I) changes to any of the requirements mandated for guarantees pursuant to §11.808 of this title[ ( relating to Guarantee from a Sponsoring Organization) ];

(J) any change in the affiliate chart as described in §11.204(6)(A) of this title;

(K) the written description of health care plan terms and conditions made available to any current or prospective group contract holder and current or prospective enrollee of the HMO, including the enrollee handbook, pursuant to the requirements of [ the ] Insurance Code §843.201 [ , Article 20A.04(13) ] and §11.1600 of this title (relating to Information to Prospective and Current Group Contract Holders and Enrollees);

(L) ­ (M) (No change.)

(N) a description of the quality assurance program, including a peer review program, as required by [ the ] Insurance Code §843.082(1) [ , Article 20A.05(a)(1) ]. Descriptions of arrangements for sharing pertinent medical records between physicians and/or providers contracting or subcontra

cting pursuant to paragraph (13)(B) of §11.204 of this title with the HMO and assuring the records´ confidentiality must also be provided.

(6) (No change.)

(7) Filing review procedure [ Review Procedure ]. Within 20 days from the department's receipt of an initial filing for commissioner's approval under this section, the department shall determine whether the filing is complete or incomplete for purposes of acceptance for review and, if found to be incomplete, the department shall issue a written or electronic notice to the HMO of its incomplete filing. A filing under this subchapter that is subject to the billing provisions of §7.1302 of this title and which, upon receipt by the department, fails to comply with the requirements of that section, will be deemed to be incomplete for purposes of this subchapter.

(A) ­ (C) (No change.)

§11.302. Service Area Expansion or Reduction Applications [ Requests ].

(a) An HMO shall file an application for approval with the department before the HMO may expand [ change ] an existing service area, reduce an existing service area, or add a new service area.

(b) If any of the following items are changed by a service area expansion or reduction application [ request ], the new item or any amendments to an existing item must be submitted for approval or filed for information, as specified in §11.301 of this title (relating to Filing Requirements):

(1) a description and a map with key and scale, showing both the currently approved service area and the proposed new service area as required by §11.204(12) of this title (relating to Contents);

(2) a form of any new contracts or amendment of any existing contracts in the new area, as described in §11.204(13) of this title;

(3) network configuration information, as required by §11.204(18) of this title [ a list of all physicians an d/or other providers to provide services in the new area, including all information required by §11.205(8) of this title (relating to Documents To Be Available During Examinations ];

(4) ­ (9) (No change.)

(10) any new or amended officers´ [ officers ] and employees´ [ employees ] fidelity bonds, in accordance with §11.204(7) and (13)(D) of this title;

(11) any new or amended reinsurance agreements, insurance or other protection against insolvency, as specified in §11.204(15) of this title ; and

(12) a description of the method by which the complaint procedure, as specified in [ the ] Insurance Code §843.251 et seq. [ Article 20A.12 ] and related regulations, will be made reasonably available in the new service area or division, including a toll free call, and the information and complaint telephone number required by the Insurance Code Article 21.71, where applicable. For HMOs subject to the Insurance Code Article 21.71, the toll free call required by this rule and the toll free information and complaint number required by the Insurance Code Article 21.71, may be the same number.

(c) The department shall not accept an application [ a filing] for review until the application [ filing ] is complete. An application to modify the certificate of authority that [ which ] requires the commissioner's approval in accordance with [ the ] Insurance Code §843.080 [ Articles 20A.04(b) ] and Article 20A.09(l) is considered complete when all information required by §11.301 of this title, this section, and §§11.1901 - 11.1902 [ §§11.1901-11.1903 ] of this title (relating to Quality of Care) that is reasonably necessary for a final determination by the department, has been filed with the department.

(d) Before consideration of a service area expansion or reduction application [ request ], the HMO must be in compliance with the requirements of §§11.1901 - 11.1902 [ §§11.1901-11.1903 ] of this title in the existing service areas and in the proposed service areas.

§11.303. Examination.

(a) The department has authority to conduct examinations of HMOs under [ the ] Insurance Code §§843.251 and 843.156 [ Articles 20A.05, 20A.12 and 20A.17 ]. Such examinations may be conducted to determine the financial condition ("financial exams"), quality of health care services ("quality of care exams"), or [ such other exams regarding ] compliance with laws affecting the conduct of business ("market conduct exams " "complaint exams") [of the HMO].

(b) On-site financial , [ and ] market conduct examinations , complaint or quality of care exams shall be conducted pursuant to [ the ] Insurance Code Article 1.15 and §7.83 of this title (relating to Appeal of Examination Reports [ Examinations ]).

(c) The following documents must be available for review at the HMO's office located within the State of Texas :

(1) administrative: policy and procedure manu als; physician and provider manuals; enrollee materials; organizational charts; key personnel information, e.g., resumes and job descriptions; and other items as requested;

(2) quality improvement: program description, work plans, program evaluations, committee and subcommittee meeting minutes;

(3) utilization management: program description, policies and procedures, criteria used to determine medical necessity, and templates of adverse determination letters; adverse determination logs, including all levels of appeal; and utilization management files;

(4) complaints and appeals: policies and procedures and templates of letters; and complaint and appeal logs, including documentation and details of actions taken. All complaints shall be categorized according to §11.205(a)(4)(A) - (J) of this title (relating to Documents to be Available for Qualifying Examinations); and complaint and appeal files;

(5) satisfaction surveys: enrollee, physician and provider satisfaction surveys, enrollee disenrollment and termination logs;

(6) health information systems: policies and procedures for accessing enrollee health records and a plan to provide for confidentiality of those records;

(7) network configuration information as required by §11.204(18) of this title (relating to Contents) demonstrating adequacy of the physician, dentist and provider network;

(8) executed agreements: including:

(A) management services agreements;

(B) administrative services agreements; and

(C) delegation agreements.

(9) executed physician and provider contracts: copy of the first page, including form number, and signature page of individual provider contracts and group provider contracts;

(10) executed subcontracts: copy of the first page, including the form number, and signature page of all contracts with subcontracting physicians and providers;

(11) credentialing: credentialing policies and procedures and credentialing files;

(12) reports: any reports submitted by the HMO to a governmental entity;

(13) claims systems: policies and procedures and systems/processes that demonstrate timely claims payments, and reports that substantiate compliance with all applicable statutes and rules regarding claims payment to physicians, providers and enrollees;

(14) financial records: including statements, ledgers, checkbooks, inventory records, evidence of expenditures, investments and debts; and

(15) other: any other records demonstrating compliance with applicable statutes and rules.

(d) [ (c) ] Quality [ On-site quality ] of care examinations shall be conducted pursuant to the following protocol:

(1) Entrance conference. The examination team or assigned examiner shall hold an entrance conference with the HMO's key management staff [ administrative personnel or their designee ] before beginning the [ on-site ] examination.

(2) Interviews. E xamination team members or the examiner shall conduct interviews with key management staff or their designated personnel.

(3) [ (2) ] Exit conference. Upon completion of the examination, the examination team or examiner shall hold an exit conference with the HMO's key management staff [ administrative personnel or their designee ].

(4) [ (3) ] Written report of examination [ outcome ]. The examination team or examiner shall prepare a written report of the examination [ outcome ]. The department shall provide the HMO w ith the written report, and if any deficiencies are cited, then the department shall issue a letter outlining the timeframes [ due dates ] for the corrective action plan and corrective actions.

[(d) The HMO shall provide a plan of correction for each deficiency cited in the letter outlining corrective action described in subsection (c) of this section. ]

(5) [ (1) ] If the examination team or examiner cites serious deficiencies, the HMO shall provide the examination team or examiner with a signed plan to correct deficiencies [ of correction ] within one business day of written notice of deficiencies. The HMO's plan of correction shall allow [ provide ] up to 12 [ 10 business ] days for correction of the deficiencies in accordance with severity of the deficiencies.

[(2) If the examiner cites potentially serious deficiencies, the HMO shall provide the examiner with a signed plan of correction within 10 business days of receiving written notice from the examiner specifying the deficiencies. The HMO's plan of correction shall provide for correction of these deficiencies no later than 30 days from the date of the exit conference. ]

(6) [ (3) ] Except as provided in paragraph (5) of this subsection, if [ If ] the examination team or examiner cites [ non-serious ] deficiencies, then the HMO shall provide a signed plan of correction to the department no later than 30 days from receipt of the written examination report. The HMO's plan [ of correction ] must provide for correction of these deficiencies no later than 90 days from the receipt of the written examination report.

(7) [ (e) ] The department shall verify the correction of deficiencies by submitted documentation or by on-site examination.

[ (f) This section does not apply to complaint investigations conducted under the Insurance Code Article 20A.12A ].

SUBCHAPTER F. Evidence of Coverage

§11.502. Filing Requirements for Evidence of Coverage. Filing requirements for the evidence of coverage, when filed as part of the application for a certificate of authority, are as follows:

(1) (No change.)

(2) The department will notify the applicant of the department´s action [ Applicant w ill be notified ] in accordance with §1.704 of this title (relating to Summary Procedure; Notice) [ writing of any deficiencies ] .

(3) During the review period, applicant must submit the original [ and four copies ] of each new page or form reflecting any revisions.

§11.503. Filing Requirements for Evidence of Coverage Subsequent to Receipt of Certificate of Authority. Subsequent to receipt of a certificate of authority, no evidence of coverage may be amended or altered in any manner, and no new evidence of coverage may be used, unless the proposed new or revised evidence of coverage has been filed for review and has received the approval of the commissioner. Filing requirements for the evidence of coverage when filed subsequent to receipt of a certificate of authority are as follows:

(1) The HMO must submit the original of the revised or new evidence of coverage, [ and four copies of a ] transmittal letter and the HMO transmittal and certification form , [ shall be submitted. All submissions must be ] addressed to the Texas Department of Insurance, Life, Health & [ Life/Health ] HMO Intake Unit , Mail Code 106-1E, P.O. Box 149104, Austin, Texas 78714-9104.

(2) The department will notify the HMO of the department´s action [ will be notified ] in accordance with §1.704 of this title (relating to Summary Procedure; Notice) [ writing of any deficiencies ] .

(3) The department will base its [ An ] approval or disapproval [ will be based ] on the content of drafts submitted to the department. [ One stamped copy of the approved or disapproved form will be returned to the HMO for its permanent file. ] Printing must comply with the specifications described in §11.505 of this title (relating to Specifications for the Evidence of Coverage). Any discrepancy in content between the final print to be issued and the approved draft is grounds for revocation of certificate of authority.

(4) - (6) (No change.)

§11.504. Disapproval of an Evidence of Coverage.

(a) If the department disapproves any portion of any evidence of coverage [ is disapproved ], the department [ commissioner ] will specify the reason for the disapproval. The department [ commissioner ] is authorized to disapprove any form or withdraw any previous approval for any of the following reasons:

(1) - (2) (No change.)

(3) it contains any statements that are unclear, untrue, unjust, unfair, inequitable, misleading, or deceptive or that violate [ the ] Insurance Code Articles 21.21, 21.21A, 21.21-1, 21.21-2, 21.21-5, 21.21-6, or 21.55 in accordance with Article 20A.09Z [ 20A.09(j) ] or any regulations thereunder or any other applicable law;

(4) - (7) (No change.)

(b) If the department disapproves a form , [ is disapproved ] the HMO may file a written request for a hearing on the matter. The department will schedule a [ A ] hearing [ will be scheduled] within 30 days from the date it receives the request [ is received] .

§11.505. Specifications for the Evidence of Coverage.

(a) - (d) (No change.)

(e) An HMO must identify each [ Each ] form [ must be identified ] by a printed unique [ suitable ] form number in accordance with §11.301(2) of this title (relating to Filing Requirements). Any change in form number is considered a change in the form and requires approval as a new form.

(f) Certain language shall not be varied or changed without resubmitting a form for the commissioner´s approval. Changeable language must be enclosed in brackets and shall include the range of variable information or amounts and is limited to rates, dates, addresses, phone numbers , optional provisions as set forth in §11.511 of this title (relating to Optional Provisions) and optional benefits as set forth in §11.512 of this title (relating to Optional Benefits), and other such information, as approved by the commissioner.

(g) (No change.)

§11.506. Mandatory Contractual Provisions: Group, Individual and Conversion Agreement and Group Certificate. Each enrollee residing in this state is entitled to an evidence of coverage under a health care plan. By agreement between the issuer of the evidence of coverage and the enrollee, the evidence of coverage approved under this subchapter and required by this section may be delivered electronically. Each group, individual and conversion contract 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 commissioner for such provisions.]

(1) Name, address, and phone number of the HMO-- The [ the ] toll-free number refer red to in [ the ] Insurance Code Article 21.71, where applicable, must appear on the face page.

(A) ­ (B) (No change.)

(C) The HMO must provide the information regarding the toll-free number referred to in Article 21.71 [ must be ] in accordance with §1.601 of this title (relating to Notice of Toll-Free Telephone Numbers and Information and Complaint Procedures[ for Obtaining Information and Filing Complaints ]).

(2) Benefits-- A [ a ] schedule of all health care services that are available to enrollees under the basic, limited, or single health care service plan, including any copayments or deductibles and a description of where and how to obtain services. An HMO may use a [ A] variable copayment or deductible schedule [ may be used ]. The copayment schedule must clearly indicate the benefit to which it applies. [ No copayment or deductible shall be charged for immunizations as described in the Insurance Code Article 21.53F for a child from birth through the date the child is six years of age, except for small employer health benefit plans as defined by the Insurance Code Chapter 26. ]

(A) Copayments. An HMO may require copayments to supplement payment [ Payment] for health care services [ may be supplemented by nominal copayments] . Each HMO may establish one or more copayment options. A basic service HMO may not impose copayment charges that exceed fifty percent of the total cost of providing any single service to its enrollees , nor in the aggregate more than twenty percent of the total cost to the HMO of providing all basic health care services. A basic service HMO may not impose copayment charges on any enrollee in any calendar year, when the copayments made by the enrollee in that calendar year total two hundred percent of the total annual premium cost which is required to be paid by or on behalf of that enrollee. This limitation applies only if the enrollee demonstrates that copayments in that amount have been paid in that year . The HMO shall state the copayment [ shall be stated ] in the group, individual or conversion agreement and group certificate.

(B) Deductibles. A deductible shall be for a specific dollar amount of the cost of the basic, limited, or single health care service. An HMO shall [ only ] charge a deductible only for services performed out of the HMO's service area or for services performed by a physician or provider who is not in the HMO's delivery network.

(C) Immunizations. An HMO shall not charge a copayment or deductible for immunizations as described in Insurance Code Article 21.53F for a child from birth through the date the child is six years of age, except that a small employer health benefit plan, as defined by Insurance Code Chapter 26, that covers such immunizations may charge a copayment or deductible.

(3) Cancellation and non-renewal-- A [ a ] statement specifying the following grounds for cancellation and non-renewal of coverage and the minimum notice period that will apply.

(A) An [ Cancellation by an ] HMO may cancel a [ of an enrollee in a group, or if a subscriber, the ] subscriber in a group and subscriber's enrolled dependents under circumstances described in clauses (i) ­ (vii) of this subparagraph, so long as the circumstances do not include health status related factors [ , in the case of ]:

(i) For nonpayment of amounts due under the contract, coverage may be cancelled after not less than 30 days written notice, except no written notice will be required for failure to pay premium . [ ; ]

(ii) In the case of fraud or intentional [ material] misrepresentation of a material fact , except as described in paragraph (14) of this section, coverage may be cancelled after not less than 15 days written notice . [ ; ]

(iii) In the case of fraud in the use of services or facilities, coverage may be cancelled after not less than 15 days written notice . [ ; ]

(iv) For failure to meet eligibility requirements other than the requirement that the subscriber reside, live, or work in the service area, coverage may be cancelled immediately, subject to continuation of coverage and conversion privilege provisions, if applicable . [ ; ]

(v) In the case of misconduct detrimental to safe plan operations and the delivery of services, coverage may be cancelled immediately . [ ; ]

(vi) For failure of the enrollee and a plan physician to establish a satisfactory patient-physician relationship if it is shown that the HMO has, in good faith, provided the enrollee with the opportunity to select an alternative plan physician, the enrollee is notified in writing at least 30 days in advance that the HMO considers the patient-physician relationship to be unsatisfactory and specifies the changes that are necessary in order to avoid termination, and the enrollee has fail ed to make such changes, coverage may be cancelled at the end of the 30 days.

(vii) Where the subscriber neither resides, lives, or works in the service area of the HMO, or area for which the HMO is authorized to do business, but only if the HMO terminates coverage [ is terminated ] uniformly without regard to any health status-related factor of enrollees, coverage may be cancelled after 30 days written notice. An HMO shall not cancel coverage [ Coverage ] for a child who is the subject of a medical support order [ cannot be cancelled solely ] because the child does not reside, live or work in the service area.

(B) An [ Cancellation by an ] HMO may cancel [ of ] a group under circumstances described in clauses (i) ­ (vi) of this subparagraph [ requires at least 60 days prior notice to the group except in the cases of ]:

(i) For nonpayment of premium, all coverage may be cancelled at the end of the grace period as described in paragraph (13) of this section . [ ; ]

(ii) In the case of fraud on the part of the group, coverage may be cancelled after 15 days written notice . [ ; ]

(iii) For [ for ] employer groups, violation of participation or contribution rules, coverage may be cancelled in accordance with §26.8(h) and §26.303(j) of this title (relating to Guaranteed Issue; Contribution and Participation Requirements and Coverage Requirements) . [ ; ]

(iv) For [ for ] employer groups, in accordance with §26.16 and §26.309 of this title (relating to Refusal To Renew and Application To Reenter Small Employer Market and Refusal To Renew and Application To Reenter Large Employer Market), coverage may be cancelled upon discontinuance of:

(I) each of its small or large employer coverages; or

(II) a particular type of small or large employer coverage.

(v) Where no enrollee resides, lives, or works in the service area of the HMO, or area for which the HMO is authorized to do business, but only if the coverage is terminated uniformly without regard to any health status-related factor of enrollees, the HMO may cancel the coverage [ may be cancelled] after 30 days written notice.

(vi) If membership of an employer in an association ceases, and if coverage is terminated uniformly without regard to the health status of an [ a covered ] enrollee, the HMO may cancel the coverage [ may be cancelled ] after 30 days written notice.

(C) In [ Cancellation by a group or individual contract holder in ] the case of a material change by the HMO to any provisions required to be disclosed to contract holders or enrollees pursuant to this chapter or other law, a group or individual contract holder may cancel the contract [ may be canceled ] after not less than 30 days written notice to the HMO.

(D) An [ Cancellation by an ] HMO may cancel [ of ] an individual contract under circumstances described in clauses (i) ­ (vi) of this subparagraph. [ in the case of: ]

(i) For nonpayment of premiums in accordance with the terms of the contract, including any timeliness provisions, coverage may be cancelled without written notice, subject to paragraph (13) of this section.

(ii) In the case of fraud or intentional material misrepresentation, except as described in paragraph (14) of this section, the HMO may cancel coverage [ may be cancelled ] after not less than 15 days written notice.

(iii) In the case of fraud in the use of services or facilities, the HMO may cancel coverage [ may be cancelled ] after not less than 15 days written notice.

(iv) Where the subscriber neither resides, lives, or works in the service area of the HMO, or area for which the HMO is authorized to do business, but only if coverage is terminated uniformly without regard to any health status-related factor of enrollees, coverage may be cancelled after 30 days written notice. An HMO shall not cancel the coverage [ Coverage ] for a child who is the subject of a medical support order [ cannot be cancelled solely ] because the child does not reside, live or work in the service area.

(v) In case of termination by discontinuance of a particular type of individual coverage by the HMO in that service area, but only if coverage is discontinued uniformly without regard to health status-related factors of enrollees and dependents of enrollees who may become eligible for coverage, the HMO may cancel coverage [ may be cancelled ] after 90 days written notice, in which case the HMO must offer to each enrollee on a guaranteed-issue basis any other individual basic health care coverage offered by the HMO in that service area.

(vi) In case of termination by discontinuance of all individual basic health care coverage by the HMO in that service area, b ut only if coverage is discontinued uniformly without regard to health status-related factors of enrollees and dependents of enrollees who may become eligible for coverage, the HMO may cancel coverage [ may be cancelled ] after 180 days written notice to the commissioner and the enrollees, in which case the HMO may not re-enter the individual market in that service area for five years beginning on the date of discontinuance at the last coverage not renewed.

(4) Claim payment procedure-- A [ a ] provision that sets forth the procedure for paying claims, including any time frame for payment of claims which must be in accordance with [ the ] Insurance Code Articles 21.55 and 20A.09Z [ 20A.09(j) ] and the applicable rules.

(5) (No change.)

(6) Continuation of coverage-- Group [ group ] agreements must contain a provision providing for mandatory continuation of coverage for enrollees who were continuously covered under a group certificate for three months prior to termination of the group coverage, or newborn or newly adopted children of enrollees with three months prior continuous coverage, that is no less favorable than provided by [ the ] Insurance Code Article 20A.09(k).

(A) An enrollee shall have the option to continue coverage as provided for by [ the ] Insurance Code Article 20A.09(k), upon completion of any continuation of coverage provided under The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) (Public Law Number 99-272, 100 stat. 222) and any amendments thereto.

(B) A dep endent, upon completion of any continuation of coverage provided under [ the ] Insurance Code Article 3.51-6 §3B, shall have the privilege to continue coverage for the 6 months prescribed by [ the ] Insurance Code Article 20A.09(k).

(C) If an HMO offers conversion coverage, it [ The mandatory continuation privilege and conversion option, if elected to be offered, ] must be offered to the enrollee not less than 30 days prior to the expiration of the COBRA or Article 3.51-6 §3B continuation coverage period.

(D) A [ Not less than 30 days before the end of the six months after the date an enrollee has elected continuation under Article 20A.09(k), a ] basic service HMO shall notify the enrollee not less than 30 days before the end of the six months from the date continuation under Article 20A.09(k) was elected that the enrollee [ he/she ] may be eligible for coverage under the Texas Health Insurance Risk Pool , as provided under [ the ] Insurance Code Article 3.77, and shall provide the address and toll-free number of the pool.

(7) - (8) (No change.)

(9) Eligibility-- A [ a ] statement of the eligibility requirements for membership, including:

(A) - (D) (No change.)

(E) a clear statement regarding the coverage of the enrollee´s [ subscriber´s ] grandchildren up to the age of 25 under the conditions under which such coverage is required by [ the ] Insurance Code Article 3.70-2, subsection (L) and Article 20A.09H (Children and Grandchildren) .

(10) Emergency services-- A [ a ] description of how to obtain services in emergency situations including:

(A) - (C) (No change.)

(D) a statement that necessary emergency care services will be provided, including the treatment and stabilization of an emergency medical condition :

(i) whether such services are provided in network or out of network or in area or out of area; and

(ii) in such a manner as to ensure that enrollees are indemnified or otherwise held harmless ; and

(E) a statement that where stabilization of an emergency condition originated in a hospital emergency facility or comparable facility, as defined in subparagraph (F) [ (G) ] of this paragraph [ section ], treatment subject to such stabilization shall be provided to enrollees as approved by the HMO, provided that the HMO is required to approve or deny coverage of poststabilization care as requested by a treating physician or provider. An HMO shall approve [ Approval] or deny [ denial of ] such treatment [ shall be made ] within the time appropriate to the circumstances relating to the delivery of the services and the condition of the patient, but in no case shall approval or denial [ is to ] exceed one hour from the time of the request.

(F) (No change.)

(11) - (14) (No change.)

(15) Out-of-network services--Each contract between an HMO and a contract holder must provide that if medically necessary covered services are not available through network physicians or providers, the HMO must, upon the request of a network physician or provider, within the time appropriate to the circumstances relating to the delivery of the services and the condition of the patient, but in no event to exceed five business days after receipt of reasonably requested documentation, allow a referral to a non-network physician or provider and shall fully reimburse the non-network provider at the usual and customary or an agreed [ upon ] rate.

(A) For purposes of determining whether medically necessary covered services are available through network physicians or providers, the HMO shall offer its [ HMO's ] entire network, rather than limited provider networks within the HMO delivery network[ ,shall be offered ].

(B) The HMO shall not require the enrollee [ shall not be required ] to change his or her primary care physician or specialist providers to receive medically necessary covered services that are not available within the limited provider network.

(C) Each contract must further provide for a review by a specialist of the same or similar specialty as the type of physician or provider to whom a referral is requested before the HMO may deny a referral.

(16) Schedule of charges--A statement that discloses the HMO's right to change the rate charged with 60 [ 30 ] days written notice pursuant to [ the ] Insurance Code Article 3.51-10.

(17) (No change.)

(18) Termination due to attaining limiting age--A provision that a child's attainment of a limiting age does not operate to terminate the coverage of the child while that child is incapable of self-sustaining employment due to mental retardation or physical disability, and chiefly dependent upon the subscriber for support and maintenance. The HMO may require the subscriber [ may be required ] to furnish proof of such incapacity and dependency within 31 days of the child's attainment of the limiting age and subsequently as required, but not more frequently than annually following the child's attainment of such limiting age.

(19) Termination due to student dependent's change in status--Each group agreement and certificate that conditions dependent coverage for a child twenty-five [ twenty-one] years of age or older on the child's being a full-time student at an educational institution shall contain a provision in accordance with [ the ] Insurance Code Article 21.24-2.

(20) (No change.)

(21) Conformity with Medicare supplement minimum standards and long-term care minimum standards--Each group, individual and conversion agreement and group certificate must comply with Chapter 3, Subchapter T of this title (relating to Minimum Standards for Medicare Supplement Policies), referred to in this paragraph as Medicare supplement rules, and Chapter 3, Subchapter Y of this title (relating to [ Minimum ] Standards for [ Benefits for ] Long-Term Care Insurance Coverage Under Individual and Group Policies), 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, an HMO shall follow both the Medicare supplement rules and/or the long-term care rules and the HMO rules [ shall be followed ] where applicable.

(22) Nonprimary care physician specialist as primary care physician--A provision that allows enrollees with chronic, disabling, or life threatening illnesses to apply to the HMO's medical director to utilize a nonprimary care physician specialist as a primary care physician as set forth in [ the ] Insurance Code Article 20A.09(g) [ 20A.09 (g-i) ] .

(23) Selected [ Designated ] obstetrician or gynecologist--Individual, conversion and group agreements and certificates, except small employer plans as defined by [ the ] Insurance Code Chapter 26, must contain a provision that permits an enrollee to select, in addition to a primary care physician, an obstetrician or gynecologist to provide health care services within t he scope of the professional specialty practice of a properly credentialed obstetrician or gynecologist, and subject to the provisions of [ the ] Insurance Code Article 21.53D. An HMO shall not preclude an enrollee [ shall not be precluded ] from selecting a family physician, internal medicine physician, or other qualified physician to provide obstetrical or gynecological care.

(A) An HMO shall permit an enrollee who selects [ designates ] an obstetrician or gynecologist direct access to the health care services of the selected [ designated ] obstetrician or gynecologist without a referral by the enrollee´s primary care physician or prior authorization or precertification from the HMO.

(B) The access to health care services of an obstetrician or gynecologist, includes[ , but is not limited to ]:

(i) ­ (iii) (No change.)

(iv) diagnosis, treatment, and referral to a specialist within the HMO´s network for any disease or condition within the scope of the selected [ designated ] professional practice of a properly credentialed obstetrician or gynecologist, including treatment of medical conditions concerning [ the ] breasts.

(C) An HMO may require an enrollee who selects [ designates ] an obstetrician or gynecologist to select [ designate ] the obstetrician or gynecologist from within the limited provider network to which the enrollee´s primary care physician belongs.

(D) An HMO may require a selected [ designated ] obstetrician or gynecologist to forward information concerning the medical care of the patient to the primary care physician. However, the HMO shall not impose [ failure to provide this information may not result in ] any penalty, financial or otherwise, [ being imposed ] upon the obstetrician or gynecologist by the HMO for failure to provide this information if the obstetrician or gynecologist has made a reasonable and good faith effort to provide the information to the primary care physician.

(E) (No change.)

(F) An HMO shall include in its enrollment form a space in which an enrollee may select an [ a designated ] obstetrician or gynecologist as set forth [ required ] in [ the ] Insurance Code Article 21.53D. The enrollment form must specify that the enrollee is not required to select an obstetrician or gynecologist, but may instead receive obstetrical or gynecological services from her primary care physician or primary care provider. Such enrollee shall have the right at all times to select or change a selected [ designated ] obstetrician or gynecologist. An HMO may limit an enrollee´s request to change an obstetrician or gynecologist to no more than four changes in any 12-month period.

(G) (No change.)

(24) (No change.)

(25) Drug Formulary [ changes ]-- A group agreement and certificate, except small employer plans as defined by Insurance Code Chapter 26, that covers prescription drugs and uses one or more formularies mus t comply with Insurance Code Article 21.52J and Chapter 21, Subchapter V of this title (relating to Pharmacy Benefits). [ If the agreement or certificate includes benefits for prescription drugs, a provision that the drug formulary may change during the contract year. Before the drug formulary may be revised to remove a prescription drug, notice of the proposed revision must be sent to all physicians, providers, and enrollees affected by the proposed revision. The notice must be provided at least 90 days prior to the proposed revision, and must inform the physician, provider and enrollee of the right to appeal to use a drug to be discontinued, pursuant to the complaints/appeals process provided by the Insurance Code Article 20A.12. The notice may be provided as a separate notice, or included in a regular publication of the HMO, such as an enrollee newsletter. If the notice required by this paragraph is included in a regular publication of the HMO, the notice must be prominently displayed and titled to indicate a potential change in prescription drug benefits to enrollees. The notice required by this paragraph need not be provided if the drug is removed from the formulary by a regulatory agency or pharmaceutical company for safety reasons. ]

(26) (No change.)

§11.508. Mandatory Benefit Standards: Group, Indiv idual and Conversion Agreements.

(a) (No change.)

(b) In addition to the basic health care services in subsection (a) of this section, each evidence of coverage shall include coverage for services as follows [ the following ]:

(1) ­ (3) (No change.)

(c) The benefits described in this section that [ subsection (a)(1)(F) and 1(H)(ii), (v) and (vi) of this section] do not apply to small employer plans are not required to be included in such plans [as defined by the Insurance Code Chapter 26 ].

(d) A state-mandated health benefit plan defined in §11.2(b) of this title (relating to Definitions) shall provide coverage for the basic health care services as described in subsection (a) of this section, as well as all state-mandated benefits as described in §§21.3516 - 21.3518 of this title (relating to State-mandated Health Benefits in Individual HMO Plans, State-mandated Health Benefits in Small Employer HMO Plans, and State-mandated Health Benefits in Large Employer HMO Plans), and must provide the services without limitation as to time and cost, other than those limitations specifically prescribed in this section

(e) (No change.)

§11.509. Additional Mandatory Benefit Standards: Group Agreement Only. Group agreements must contain the following additional mandatory provisions.

(1) (No change.)

(2) New enrollees [ members ]. A provision s pecifying the conditions under which new enrollees [ members ] may be added to those originally covered, including effective date requirements. For coverage issued to employers, a provision for special enrollment in accordance with 45 C.F.R. 146.117 (Health Insurance Portability and Accessibility Act).

(3) Chemical dependency. A provision to provide benefits for the necessary care and treatment of chemical dependency that are not less favorable than for physical illness generally, subject to the same durational limits, dollar limits, deductibles and coinsurance factors is required for state-mandated health benefit plans defined in §11.2(b) of this title (relating to Definitions). Dollar or durational limits which are less favorable than for physical illness generally may be set only if such limits are sufficient to provide appropriate care and treatment under the guidelines and standards adopted under the Insurance Code Article 3.51-9, §2A(d), including §§3.8001 - 3.8022 of this title (relating to Standards for Reasonable Cost Control and Utilization Review for Chemical Dependency Treatment Centers).

(A) - (B) (No change.)

(4) Osteoporosis. A provision that provides coverage to a qualified individual as defin ed in the Insurance Code Article 21.53C for medically accepted bone mass measurement for the detection of low bone mass and to determine the person's risk of osteoporosis and fractures associated with osteoporosis is required for state-mandated health benefit plans defined in §11.2(b) of this title.

(5) (No change.)

(6) Conditions affecting the temporomandibular joint. Group agreements, except for contracts issued to small employer plans and consumer choice health benefit plans defined in §11.2(b) of this title must include a provision that provides coverage for a condition affecting the temporomandibular joint as required by [ the ] Insurance Code Article 21.53A.

(7) Inability to undergo dental treatment. Group agreements, except for contracts issued to small employer plans and consumer choice health benefit plans defined in §11.2(b) of this title, may not exclude from coverage under the plan an enrollee who is unable to undergo dental treatment in an office setting or under local anesthesia due to a documented physical, mental, or medical reason as determined by the enrollee's physician or the dentist providing the dental care. This be nefit does not require an HMO to provide dental services if dental services are not otherwise scheduled or provided as part of the benefits covered by the agreement.

§11.512. Optional Benefits. An HMO may provide to its enrollees health services that [ are not included as basic health care services under ] §11.508 of this title (relating to Mandatory Benefit Standards; Group, Individual and Conversion Agreements) does not include as basic health care services. An HMO may limit these optional [ These ] health services [ may be limited ] as to time and cost. Group, individual and conversion certificates may contain optional benefits, including [ but not limited to ]:

(1) - (15) (No change.)

SUBCHAPTER G. Advertising and Sales Material

§11.602. Health Maintenance Organizations Subject to the Texas Insurance Code, Articles 21.21, 21.21-1, and 21.21-2, and Related Rules. Health maintenance organizations must comply with the Texas Insurance Code Articles [ , Article ] 21.21, 21.21-1, and [ Article ] 21.21-2, and rules promulgated by the Texas Department [ State Board ] of Insurance, pursuant to the Texas Insurance Code Articles [ , Article ] 21.21, 21.21-1 [ 21-21-1 ], and [ Article ] 21.21-2, to the extent these rules may be applied in the same manner as insurance companies.

§11.603. Filings. Any HMO licensed to do business in Texas which offers coverage to Medicare beneficiaries under the provisions of Subchapter XVIII of 42 United States Code, Health Insurance for the Aged and Disabled [ Diabled ], shall file with the department a copy of each advertisement related to such coverage which is produced by the HMO or its agents and which is an invitation to inquire or invitation to contract as defined in §21.113 of this title (relating to Rules Pertaining Specifically to Accident and Health Insurance Advertising and Health Maintenance Organization Advertising) no later than 45 days prior to its use. Material shall be filed in accordance with §21.120 of thi s title (relating to Filing for Review). 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 documents.

SUBCHAPTER I. Financial Requirements

§11.801. Minimum Net Worth.

(a) On or after September 1, 1999, at the time of the initial qualifying examination, an applicant for a certificate of authority to operate an HMO must have unencumbered assets of the type described in subsection (b) of this section in excess of all of its liabilities equal to or greater than the required net worth established in Insurance Code §843.403 [Article 20A.13A]. An HMO licensed before September 1, 1999 , must comply with the minimum net worth requirement in Insurance Code §843.4031[, Article 20A.13B].

(b) (No change.)

(c) After the qualifying examination, the applicant must maintain unencumbered assets in excess of all of its liabilities by an amount equal to or greater than the minimum net worth requirement until it receives its certificate of authority, and thereafter, the HMO must meet the minimum net worth requirements of [the] Insurance Code §843.403 [ Article 20A.13A ], by maintaining unencumbered assets in excess of its liabilities equal to or greater than the minimum net worth requirement.

(d) Notwithstanding subsections (b) and (c) of this section, foreign HMOs seeking admission to this state which are actively conducting business in other states, in addition to approved non-profit health corporations authorized under [ the ] Insurance Code §844.005 [ Article 21.52F ], shall be required, at a minimum, to comply with [ the ] Insurance Code §843.403 [Article 20A.13A] a t the time of the qualifying examination.

§11.802. Statutory Deposit Requirements.

(a) Statutory deposits made pursuant to [ the ] Insurance Code §843.405 [ Article 20A.13 ] must consist of funds in the form of lawful money of the United States of America, bonds of this state, bonds or other evidences of indebtedness of the United States of America or any of its agencies when such obligations are guaranteed as to principal and interest by the United States of America, or bonds or other interest-bearing evidences of indebtedness of any counties or municipalities of this state.

(1) ­ (2) (No change.)

(b) Before the issuance of the certificate of authority, the HMO must submit funds as described in subsection (a) of this section in the amount required by [ the ] Insurance Code §843.405 [ Article 20A.13 ], with four compl eted originals of security deposit report form number 120, one original pledge document on bank letterhead, and the applicable fees pursuant to §7.1301(d) of this title (relating to Regulatory Fees) to the bond and securities officer of the department.

(c) Each HMO must annually determine the amount of statutory deposit required as specified in [ the ] Insurance Code §843.405 [ Article 20A.13 ] and deposit any required additional funds by March 15 in the manner set forth as follows:

(1) ­ (2) (No change.)

(d) (No change.)

(e) If the HMO wishes to request a release of all or part and/or a waiver of the statutory deposit requirements as permitted by [ the ] Insurance Code §843.405 [ Article 20A.13 ], the HMO must submit a written request [ must be submitted ] to the commissioner no less than 60 days prior to the March 15 due date. Such request for any release or waiver must provide adequate information, including the following, to justify the release:

(1) ­ (5) (No change.)

(6) If an HMO requests a release [ is requested ] under subsections (e) or (f) [ (d) or (e) ] of [ the ] Insurance Code §843.405 [ Article 20A.13 ]:

(A) ­ (B) (No change.)

(7) (No change.)

(f) Whenever conditions upon which a waiver were granted change to the extent that the HMO is no longer able to qualify for the waiver, the HMO must deposit adequate funds to comply with the requirements of [ the ] Insurance Code §843.405 [ Article 20A.13 ], within 30 days.

(g) (No change.)

§11.803. Investments, Loans, and Other Assets. The admitted assets of domestic and foreign HMOs must at all times comply with the provisions of this section.

(1) Investment of minimum net worth. An HMO must maintain assets in an amount equivalent to its required minimum net worth in accordance with Insurance Code §843.403 [ Article 20A.13A(d) ]. Demand deposits, savings deposits or time deposits, of the type that are federally insured in solvent banks and savings and loan associations and branches thereof, which are organized under the laws of the United States of America or under the laws of any state of the United States of America may not exceed the greater of:

(A) ­ (B) (No change.)

(2) ­ (6) (No change.)

§11.806. Liabilities.

(a) Each HMO must establish and maintain records identifying and supporting each liability the HMO incurs. Each liabil ity incurred by an HMO shall be reported on all financial statements filed with the department. A liability shall be incurred from the date a service was performed, a product was delivered, a title was transferred, or a contractual obligation entered into for an amount that is specified and unconditionally owed. Each HMO must segregate its liabilities into classification of "covered" or "uncovered." Agreements to loan money or to make future capital or surplus contributions do not, in themselves, cause liabilities to be covered. Any guarantee of future contributions to surplus which are directed and based on the payment of a debt will allow that debt to be reflected as a covered liability. A liability, for which provision is made other than by the assets of the HMO, may qualify as a covered liability if the amount owed:

(1) is based on a provider contract with a hold-harmless clause as provided in §11.901(a)(1) [ §11.1102 ] of this title (relating to Required Provisions [ Hold-Harmless Clause ]);

(2) ­ (3) (No change)

(b) ­ (c) (No change.)

§11.809. Risk-Based Capital for HMOs and Insurers Filing the NAIC Health Blank.

(a) Health Maintenance Organizations. This section applies to all domestic and foreign HMOs subject to the provisions of [ the ] Insurance Code Chapters [ , Chapter ] 20A and 843 .

(b) ­ (d) (No change.)

(e) Actions of commissioner. The commissioner may take the following actions against an HMO that fails to maintain, at a minimum, 70% of the authorized control level risk-based capital in the RBC Report as calculated in accordance with the RBC instructions:

(1) ­(2) (No change.)

(3) find the HMO to be in hazardous financial condition as provided by [ the ] Insurance Code §843 .406 [ Article 20.19 ] and §11.810 of this title (relating to Hazardous Conditions for HMOs);

(4) find the HMO to be in violation of the minimum net worth requirements of Insurance Code §843.404 [ Article 20A.13C ] and take action as provided by Insurance Code §843.407 [ Article 20A.31 ], or

(5) (No change.)

(f) ­ (g) (No change.)

§11.810. Hazardous Conditions for HMOs.

(a) Purpose. The purpose of this section is to enumerate conditions which may indicate an HMO is in hazardous condition and which authorize [ may be a basis for ] the commissioner of insurance to initiate an action against an HMO under Insurance Code §843.461 or §843.157 [ Articles 20A.20 or 20A.21 ]. In evaluating any of the conditions in this section, the commissioner must evaluate all circumstances concerning the HMO's operation [ must be evaluated ] in making an ultimate conclusion that an HMO is in hazardous condition. The evaluation of the information relating to these conditions is a part of the examination process. The conditions enumerated in this section do not conclusively indicate that an HMO is in hazardous condition. One or more of the conditions can exist in an HMO which is in satisfactory condition; however, one or more of these conditions has often been found in an HMO which was unable to perform its obligations to enrollees, creditors or the general public, or has required the commissioner to initiate regulatory action to protect enrollees, creditors and the general public.

(b) An HMO may be found to be in hazardous condition, after notice and opportunity for hearing, when the commissioner finds one or more of the following conditions [ are found ] to exist [ by the commissioner ]:

(1) ­ (4) (No change.)

(5) an HMO fails to comply with the Texas Health Maintenance Organization Act (Insurance Code Chapters [ Chapter ] 20A and 843 ) or Title 28, Texas Administrative Code, Chapter 11;

(6) ­ (13) (No change.)

(14) an HMO does not maintain books and records sufficient to permit examiners to determine the financial condition of the HMO, examples of which include [, but are not limited to] :

(A) a domestic HMO maintains books and records [ of a domestic HMO are maintained ] outside the State of Texas in violation of [ the ] Insurance Code Chapter 803 [ Article 1.28 ]; or

(B) an HMO moves, or maintains, the location of the books and records necessary to conduct an examination without notifying the department of such location;

(15) ­ (19) (No change.)

(20) an HMO does not have the minimum net worth required by Insurance Code §843.403 or §843.4031 [ Articles 20A.13A or 20A.13B ];

(21) an HMO does not meet the requirements of §11.809 of this title (relating to Risk-Based Capital for HMOs and Insurers Filing the NAIC Health Blank ); or

(22) (No change.)

SUBCHAPTER J. Physician and Provider Contracts and Arrangements

§11.901. Required Provisions.

(a) Physician and provider contracts and arrangements shall include [ the following ] provisions:

(1) regarding a hold harmless clause as described in [ the ] Insurance Code §843.361 [ Article 20A.18A(g) and §11.1102 of this title (relating to Hold Harmless Clause); ] :

(A) A hold harmless clause is a provision, as required by Insurance Code §843.361, in a physician or health care provider agreement that obligates the physician or provider to look only to the HMO and not its enrollees for payment for covered services (except as described in the evidence of coverage issued to the enrollee).

( B) In accordance with Insurance Code §843.002 relating to an "uncovered expense," if a physician or health care provider agreement contains a hold harmless clause, then the costs of the services will not be considered uncovered health care expenses in determining amounts of deposits necessary for insolvency protection under Insurance Code §843.405 .

(C) The following language is an example of an approvable hold-harmless clause: (Physician/Provider) hereby agrees that in no event, including, but not limited to non-payment by the HMO, HMO insolvency, or breach of this agreement, shall (physician/provider) bill, charge, collect a deposit from, seek compensation, remuneration, or reimbursement from, or have any recourse against subscriber, enrollee, or persons other than HMO acting on their behalf for services provided pursuant to this agreement. This provision shall not prohibit collection of supplemental charges or copayments on HMO's behalf made in accordance with the terms of (applicable agreement) between HMO and subscriber/enrollee. (Physician/Provider) further agrees that:

(i) this provision shall survive the termination of this agreement regardless of the cause giving rise to termination and shall be construed to be for the benefit of the HMO subscriber/enrollee; and

(ii) this provision supersedes any oral or written contrary agreement now existing or hereafter entered into between (physician/provider) and subscriber, enrollee, or persons acting on their behalf. Any modification, addition, or deletion to the provisions of this clause shall be effective on a date no earlier than 15 days after the commissioner has received written notice of such proposed changes;

(2) regarding retaliation as described in [ the ] Insurance Code §843.281 [ Article 20A.14(k) ];

(3) regarding continuity of treatment, if applicable, as described in [ the ] Insurance Code §843.309 and §843.362 [ Article 20A.18(A)(c) ];

(4) regarding written notification to enrollees receiving care from a physician or provider of the HMO´s termination of that physician or provider in accordance with §843.308 and §843.309 [ of termination to a physician or provider at least 90 days prior to the effective date of the termination of the physician or provider, except in the case of imminent harm to patient health, action against license to practice, or fraud pursuant to Insurance Code Article 20A.18A(b), in which case termination may be immediate. Upon written notification of termination, a physician or provider may seek review of the termination within a period not to exceed 60 days, pursuant to the procedure set forth in the Insurance Code Article 20A.18A(b). The HMO must provide notification of the termination of a physician or provider to its enrollees receiving care from the provider being terminated at least 30 days before the effective date of the termination. Notification of termination of a physician or provider to enrollees for reasons related to imminent harm may be given to enrollees immediately ];

(5) regarding written notification of termination to a physician or provider in accordance with Insurance Code §843.306 and §843.307:

(A) the HMO must provide notice of termination by the HMO to the physician or provider at least 90 days prior to the effective date of the termination;

(B) not later than 30 days following receipt of the written notification of termination, a physician or provider may request a review by the HMO´s advisory review panel;

(C) within 60 days following receipt of the provider´s request for review, the advisory review panel must make its formal recommendation and the HMO must communicate its decision to the physician or provider;

(6) [ (5) ] regarding posting of complaints notice in physician/provider offices as described in [ the ] Insurance Code §843.283 [ Article 20A.18A(i) ]. A representative notice that complies with this requirement may be obtained from the HMO Division, Mail Code 103-6A , Texas Department of Insurance, [ HMO/UR/QA Group ], P.O. Box 149104 , Austin , Texas 78714-9104 ;

(7) [ (6) ] regarding indemnification of the HMO as described in [ the ] Insurance Code §843.310 [ Article 20A.18A(f) ];

(8) [ (7) ] regarding prompt payment of claims as described in [ the ] Insurance Code Article 20A.09Z [ 20A.09(j) ] and all applicable statutes and rules pertaining to prompt payment of clean claims, including Insurance Code Chapter 843, Subchapter J (Payment of Claims to Physicians and Providers) [ Article 20A.18B (Prompt Payment of Physician and Providers) ] and Chapter 21, Subchapter T [ §§21.2801-21.2820 ] of this title (relating to Submission of Clean Claims) with respect to the payment to the physician or provider for covered services that are rendered to enrollees;

(9) [ (8) ] regarding capitation, if applicable, as described in [ the ] Insurance Code §§843.315 and 843.316 [ Article 20A.18A(e) ];

(10) [ (9) ] regarding selection of a primary physician or provider, if applicable, as described in [ the ] Insurance Code §843.315; [ Article 20A.18A(e) ; and ]

(11) [ (10) ] entitling the physician or provider upon request to all information necessary to determine that the physician or provider is being compensated in accordance with the contract. A physician or provider may make the request for information by any reasonable and verifiable means. The information must include a level of detail sufficient to enable a reasonable person with sufficient training, experience and competence in claims processing to determine the payment to be made according to the terms of the contract for covered services that are rendered to enrollees. The HMO may provide the required information by any reasonable method through which the physician or provider can access the information, including e-mail, computer disks, paper or access to an electronic database. Amendments, revisions or substitutions of any information provided pursu ant to this paragraph must be made in accordance with subparagraph (D) of this paragraph. The HMO shall provide the fee schedules and other required information by the 30th day after the date the HMO receives the physician's or provider's request.

(A) This information must include a physician-specific or provider-specific summary and explanation of all payment and reimbursement methodologies that will be used to pay claims submitted by a physician or provider. At a minimum, the information must include:

(i) a fee schedule, including, if applicable, CPT, HCPCS, CDT, ICD-9-CM codes and modifiers:

(I) by which the HMO will calculate and pay all claims for covered services submitted by or on behalf of the contracting physician or provider [ will be calculated and paid ]; or

(II) that pertains to the range of health care services reasonably expected to be delivered under the contract by that contracting physician or provider on a routine basis along with a toll-free number or electronic address through which the contracting physician or provider may request the fee schedules applicable to any covered services that the physician or provider intends to provide to an enrollee and any other information required by this paragraph, that pertains to the service for which the fee schedule is being requested if the HMO has not [ that information has not ] previously [ been ] provided that information to the physician or provider;

(ii) all applicable coding methodologies;

(iii) all applicable bundling processes, which must be consistent with nationally recognized and generally accepted bundling edits and logic;

(iv) all applicable downcoding policies;

(v) a description of any other applicable policy or procedure the HMO may use that affects the payment of specific claims submitted by or on behalf of the contracting physician or provider, including recoupment;

(vi) any addenda, sch edules, exhibits or policies used by the HMO in carrying out the payment of claims submitted by or on behalf of the contracting physician or provider that are necessary to provide a reasonable understanding of the information provided pursuant to this paragraph; and

(vii) the published, product name and versionof any software the HMO uses to determine bundling and unbundling of claims.

(B) In the case of a reference to source information as the basis for fee computation that is outside the control of the HMO, such as state Medicaid or federal Medicare fee schedules, the information [ provided by ] the HMO provides shall clearly identify the source and explain the procedure by which the physician or provider may readily access the source electronically, telephonically, or as otherwise agreed to by the parties.

(C) Nothing in this paragraph shall be construed to require an HMO to provide specific information that would violate any applicable copyright law or licensing agreement. However, the HMO must supply, in lieu of any information withheld on the basis of copyright law or licensing agreement, a summary of the information that will allow a reasonable person with sufficient training, experience and competence in claims processing to determine the payment to be made according to the terms of the contract for covered se rvices that are rendered to enrollees as required by subparagraph (A) of this paragraph.

(D) No amendment, revision, or substitution of any of the claims payment procedures or any of the information required to be provided by this paragraph shall be effective as to the contracting physician or provider, unless the HMO provides at least 90 calendar days written notice to the contracting physician or provider identifying with specificity the amendment, revision or substitution. An HMO may not make retroactive changes to claims payment procedures or any of the information required to be provided by this paragraph. Where a contract specifies mutual agreement of the parties as the sole mechanism for requiring amendment, revision or substitution of the information required by this paragraph, the written notice specified in this section does not supersede the requirement for mutual agreement.

(E) Failure to comply with this paragraph constitutes a violation of Insurance Code Chapters 843 and [ Chapter ] 20A (Texas Health Maintenance Organization Act).

(F) [ This paragraph applies to all contracts entered into or renewed on or after the effective date of this paragraph. ] Upon receipt of a request, the HMO must provide the information required by subparagraphs (A) - (D) of this paragraph to the contracting physician or provider by the 30th day after the date the HMO receives the contracting physician's or provider's request.

(G) A physician or provider that receives information under this paragraph:

(i) may not use or disclose the information for any purpose other than:

(I) the physician´s or provider´s practice management,

(II) billing activities,

(III) other business operations, or

(IV) communications with a governmental agency involved in the regulation of health care or insurance;

(ii) may not use this information to knowingly submit a claim for payment that does not accurately represent the level, type or amount of services that were actually provided to an enrollee or to misrepresent any aspect of the services; and

(iii) may not rely upon information provided pursuant to this paragraph about a service as a representation that an enrollee is covered for that service under the terms of the enrollee´s evidence of coverage.

- (H) A physician or provider that receives information under this paragraph may terminate the contract on or before the 30 th day after the date the physician or provider receives the information without penalty or discrimination in participation in other health care products or plans. The contract between the HMO and physician or provider shall provide for reasonable advance notice to enrollees being treated by the physician or provider prior to the termination consistent with Insurance Code §843.309.

(I) The provisions of this paragraph may not be waived, voided, or nullified by contract ; [ . ]

(12) providing that a podiatrist, practicing within the scope of the law regulating podiatry, is permitted to furnish x-rays and nonprefabricated orthotics covered by the evidence of coverage; and

(13) regarding electronic health care transactions as set forth in §21.3701 of this title (relating to Electronic Health Care Transactions) if the contract requires electronic submission of any information described by that section.

(b) [ (11) ] An HMO may require a contracting physician or provider to retain in the contracting physician or provider's records updated information concerning a patient's other health benefit plan coverage.

§11.902. Prohibited Actions.

(a) Pursuant to Insurance Code §843.320, a contract between an HMO and a physician may not require the physician to use a hospitalist for a hospitalized patient. (b) Pursuant to Insurance Code §843.3045, an HMO may not refuse to contract with a nurse first assistant as defined by §301.1525, Occupations Code, to be included in the HMO´s provider network or refuse to reimburse the nurse first assistant for a covered service that a physician has requested the nurse first assistant to perfo rm.

(c) An HMO may not by contract or any other method require a physician to use the services of a nurse first assistant as defined by §301.1525, Occupations Code.

(d) Pursuant to Insurance Code §843.319 (Certain Required Contracts), an HMO may not deny a contract to a podiatrist licensed by the Texas State Board of Podiatric Medical Examiners who joins the professional practice of a contracted physician or provider, satisfies the HMO´s application procedures and meets the HMO´s qualification and credentialing requirements for contracting.

(e) Pursuant to Insurance Code §843.312, an HMO may not refuse a request by a contracted physician and a physician assistant or advanced practice nurse who is authorized by the physician to provide care under Subchapter B, Chapter 157, Occupations Code, to identify a physician assistant or advanced practice nurse as a provider in the HMO´s network, provided the physician assistant or advanced practice nurse meets the quality of care standards for participation in the HMO´s network.

§11.904. Provision of Services Related to Immunizations and Vaccinations.

(a) Pursuant to Insurance Code Article 21.53K, an [ An ] HMO shall not require a physician to issue an immunization or vaccination protocol for an immunization or vaccination to be administered to an enrollee by a pharmacist.

(b) No contract between an HMO and a pharmacy or pharmacist shall prohibit a pharmacist from administering immunizations or vaccinations if such immunizations or vaccinations are administered in accordance with the Texas Pharmacy Act, (Subtitle J, Occupations Code) [ Article 4542a-1, Texas Civil Statutes ] and rules promulgated thereunder.

SUBCHAPTER K. Required Forms

§11.1001. Required Forms. The following forms are to be used in conjunction with the rules adopted under this chapter. Copies of these forms may be obtained by contacting the Company Licensing and Registration [ Insurer Services ] Division, Mail Code 305-2C, Texas Department of Insurance, 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 this title and as are appropriate to its particular activities. The forms are listed as follows:

(1) Name Application Form Rev. 02/99 [ 11/97 ];

(2) Application for a Certificate of Authority to do business in the State of Texas , Rev. 02/99 [ 11/97 ];

(3) State of Texas Officers and Directors Page, Rev. 06/2000 [ 11/97 ];

(4) State of Texas Biographical Affidavit, Rev. 01/2002 [ 11/97 ];

(5) HMO Certification and Transmittal Form Rev. 02/99 [ 11/97 ];

(6) Reconciliation of Benefits to Schedule of Charges Form, Rev. 04/92 [ 4/92 ];

(7) Deposit Report Form, No. 120; and

(8) Withdrawal Form, No. 121.

SUBCHAPTER N. HMO Solvency Surveillance Committee Plan of Operation

§11.1301 Plan of Operation. This plan of operation, hereinafter referred to as the plan, shall become effective upon written approval of the Texas Department of Insurance, hereinafter referred to as the department, as provided by the Texas Health Maintenance Organization Act, Insurance Code Chapters [ Chapter ] 20A and 843 , hereinafter referred to as the Act. As used in this subchapter, the committee shall be the solvency surveillance committee as provided for and defined in the Act, and the members shall be the members of the committee as provided for and defined in the Act.

§11.1302 Solvency Surveillance Committee.

(a) Members. The composition of the committee shall be in accordance with Insurance Code §843.436. [ There shall be nine members of the committee appointed by the commissioner. A member is a Texas licensed HMO as defined in the Act or a public representative. Five of the members shall represent HMOs or their holding company system. The remaining four members shall be public representatives. The commissioner shall appoint the HMO members along with the officers or employees of the members who shall serve on the committee. The HMO members shall be appointed based on plan character istics. Of the HMO members, one shall be a single service HMO as defined in the Act. The remaining HMO members shall be selected by the commissioner with due consideration of factors deemed appropriate including, but not limited to, the varying categories of premium income and geographical location. No two HMO members may be employees or officers of the same HMO or holding company system. Public representatives may not be officers, directors or employees of an HMO, HMO agents, or any other business entities regulated by the department; or persons required to register with the Texas Ethics Commission under Government Code, Chapter 305, or related to persons described in this subsection within the second degree of affinity or consanguinity.]

(1) The HMO members' terms shall last for three years unless otherwise appointed by the commissioner and shall be staggered with three appointments expiring each year. A member's term shall terminate if the member leaves the HMO [ plan] whose characteristics were the basis for appointment. The HMO [ plan] shall not automatically continue as a member.

(2) Members may serve multiple terms.

(3) A member shall serve until a successor is appointed unless such member's term is in conf lict with the Act, or unless a member misses two or more consecutive meetings or engages in willful misconduct, in which case the commissioner may remove the member. The [ If a member's term is in conflict with the Act, the ] committee shall make recommendations to the commissioner and the department to fill vacancies. [ th is vacancy. The committee may at such other times make recommendations to the commissioner and the department regarding vacancies which may arise from time to time. ]Members shall not receive any remuneration or emolument of office.

(4) The members shall elect a chairman, a vice chairman, a secretary-treasurer, and such other officers as they deem necessary. The term of office shall be one year or until a successor is elected and qualified. Vacancies occurring in elective office shall be filled by vote of the members.

(b) Voting. A majority of the members [ present and voting ] shall constitute a quorum for the transaction of business, an d the acts of a majority of the members [ voting in person ] at a meeting at which a quorum is present shall be the acts of the committee . An [ ; except that an ] affirmative vote of a majority of the total membership of the committee shall be required:

(1) ­ (4) (No change.)

(5) to extend funding of expenses of supervision, conservation, rehabilitation, or liquidation [ conservation ] of an HMO as provided in Insurance Code §843.441 [ beyond the statutory 150 days] unless special notice of the desire to take action on this item is part of the notice of the meeting, in which case the acts of a majority of the members voting in person at a meeting at which a quorum is present shall be the acts of the committee.

(c) Meetings. On a day determined by the members, the committee shall hold a regular annual meeting. At its annual meeting, the committee may schedule additional regular meetings to be held during the period between annual meetings. Meetings shall be held [ meetings ] at the department's offices [ no less frequently than quarterly each year ] unless the commissioner, chairman of the committee, or other officer acting on the chairman´s behalf, designates [ officers , upon 10 days' notice, shall ] [ designate ] some other [ date or ] place. [ Such notice can be oral or written. Notice of regular meetings shall be provided by the chairman or other officer acting on his or her behalf. ] At each such meeting the committee may:

(1) ­ (4) (No change.)

(5) consider any extension of funding for the expenses of supervision, conservation, rehabilitation, or liquidation [ conservation ] of an HMO as provided in Insurance Code §843.441 [ beyond the statutory 150 days ];

(6) review [ latest ] financial information relating to [ statements of ] each HMO. Committee members shall be provided with reports regarding the financial condition of Texas licensed HMOs and regarding the financial condition, administration, and status of HMOs in [ rehabilitation, liquidation, ] supervision, [ or ] conservation , rehabilitation, or liquidation at meetings. Committee members shall not reveal the condition of nor any information secured in the course of any meeting of the committee with regard to any corporation, form, or person examined by the committee;

(7) ­ (9) (No change.)

(10) review, consider, and act on the powers given the committee for a special or emergency meeting as outlined in subsection (d)(1) - (3) of this section; and

(11) review, consider, and act on other matters deemed by it to be necessary and proper for the administration of the committee.

(d) Special or emergency meetings. The committee shall hold a special or emergency meeting promptly after receiving notice from the commissioner of the need for such meeting. In addition, a special meeting of the committee may be held at the request of a majority of the membership, which shall be polled by the chairman at the request of any two members seeking a special meeting. [ Such meeting may be held at the department's offices or by telephone conference call at the discretion of the commissioner. At least 48 hours' oral or written notice shall be given each mem ber of such meeting by the commissioner; provided, however, if the period of notice is less than five days, such notice must be given orally by telephone conference to a majority of the full committee; provided, further, however, the committee may always act orally or in meeting by waiving the 48-hour notice. ] At such meetings, the committee, if appropriate, shall perform the following functions.

(1) The committee shall receive and consider the report of the commissioner regarding HMO impairments or insolvencies within the meaning of [ the ] Insurance Code Articles 21.28 and 21.28-A. Such reports may include progress and developments on management of such impairments or insolvencies.

(2) In consultation with the commissioner, the committee shall consider what assessment, if any, shall be levied, decide whether any refund should be made to an HMO, and consider and decide whether any assessment for expenses of supervision, conservation, rehabilitation, or liquidation [ conservation ] shall be extended as provided in Insurance Code §843.441 [ beyond 150 days ]. Assessments shall conform to Insurance Code §843.441 [ the Act, §36 (c) and (h) ]. Any HMO failing to pay an assessment after 30 days' written notice that payment is due, shall be reported to the commissioner, and the committee shall consider what other action, if any, shall be taken.

(3) ­ (4) (No change.)

(e) Notice. Notice of [ Special ] meetings of the committee shall be in accordance with Chapter 551 of the Government Code. [ may be called by the chairman and shall be called upon request of any two members. Not less than five days' oral or written notice shall be given to each member of the time, place, and purpose of any such special meeting. Any member not present may consent in writing to any specific action taken by the committee, but this shall not permit members to act through other members by proxy. Any action approved by the required number of members at such meeting, including those members consenting in writing, shall be as valid a committee action as though authorized at a regular meeting of the committee. At such special meeting, the committee may consider and decide any matter deemed by it to be necessary for the proper administration of the committee. ]

[ (f) Emergency meetings. Emergency meetings of the committee may be called by the commissioner, by the chairman, or upon the request of any two members. Due to the urgent nature of emergency meetings, the five days' oral or written requirement for notice shall be waived provided the commissioner makes reasonable attempts to contact each committee member. At such emergency meeting, the committee may consider, decide, and act on any matter deemed by it to be necessary and urgent for the proper administration of the committee. ]

(f) [ (g) ] Attendance at meeting. Committee meetings shall [ not ] be open to the public, but the committee may hold a closed meeting under the provisions of Subchapter D of Chapter 551, Government Code, in which [ and ] only committee members, the commissioner, and persons authorized by the commissioner shall be in attendance at such meeting .

§11.1303 Operations.

(a) ­ (b) (No change.)

(c) Custodian of accounts.

(1) The committee [ hereby ] appoints the director of liquidation oversight [ liquidator designated by the department ] as the custodian of the administrative account and as its agent for collecting assessments from HMOs. In the name of the committee, the custodian shall maintain such funds in depositories as provided by [ the ] Insurance Code Article 21.28, §(2)(h). The committee may authorize the investment of some or all of these funds in other types of [ type ] investments.

(2) The director of liquidation oversight [ liquidator] shall maintain suitable account records [ to account for the funds under his custody ] and shall furnish the committee at each regular meeting [ thereof ] a statement of the financial condition of the committee and a statement of income and disbursements since the last report. The director of liquidation oversight [ liquidator ] shall be entitled to reimbursement for [ his ] actual expenses in performing the custodian´s [ his ] duties under this subsection and is authorized to hire a certified public accountant to audit the annual statement required by [ the ] Insurance Code Chapters [ Article ] 20A and 843 .

(3) Disbursement of any of the funds of the committee specifically authorized by this plan or subsequently authorized by resolution of the committee may be made by the custodian upon receipt of a statement or voucher describing the proposed expenditure that [ which ] has been approved in writing by an officer of the committee.

(d) Additional procedures. The committee shall [, from time to time, as it deems appropriate, ] establish any additional procedures for handling any [ asset or ] assets of the committee as deemed appropriate .

§11.1304 Records and Reports.

(a) Written record. A w ritten record of the proceedings of each committee meeting shall be made. The original of this record shall be retained by the commissioner with copies [ being ] furnished to each member[ , ] and to the department. The [ Such ] record shall be subject to the pertinent provisions of the law , including [ those as to the ] confidentiality laws [ of the proceedings of the committee ].

(b) (No change.)

§11.1305 Appeals.

(a) (No change.)

(b) Appeal to district court. Any HMO or HMO agent which is affected by any ruling or action of the commissioner may file a petition in the District Court of Travis County, Texas to have any [ such ] ruling or action reviewed by the court pursuant to [ the ] Insurance Code §§36.201 - 36.205 [ Article 1.04, §(a) ].

§11.1306 Conformity of Statute. Sections 843.435 ­ 843.441 of the Texas Insurance Code are [ , Article 20A.36, as written, and as may be amended, is ] incorporated as a part of this plan.

SUBCHAPTER O. Administrative Procedures

§11.1401. Commissioner's Authority to Require Additional Information. The commissioner may require additional information as needed to make any determination required by [ the Texas ] Insurance Code, Chapters [ Chapter ] 20A and 843 , or this chapter [ these rules ].

§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 [the Texas ] Insurance Code §843.305 [ , 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. Section 843.305 [ 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.

(b) An [ 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 §843.305[ , 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 through 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.

(c) [ (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.

(d) [ (c) ] A health maintenance organization must file a copy of the published notice with the HMO Division [ 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.]

§11.1403. Requirement for Notifying Enrollees of Toll-free Telephone Number for Complaints about Psychiatric or Chemical Dependency Services of Private Psychiatric Hospitals, General Hospitals , and Chemical Dependency Treatment Centers . Health Maintenance Organizations shall include in their next available newsletter or other general mailing to all enrollees following the effective date of this section [ rule ], and shall include in information provided to new subscribers, the following notice:

FIGURE: 28 TAC §11.1403:

FOR A COPY OF THE FIGURE CONTACT (sylvia.gutierrez@tdi.state.tx.us)

§11.1404. Pharmacy Application and Recertification.

(a) An HMO [ subject to the requirements of the Texas Insurance Code, Article 21.52B, as amended, ] may establish reasonable application and recertification fees for each licensed pharmacy that [ which ] participates or applies to participate as a contract provider in an HMO delivery network.

(b) An application or recertification fee charged under this section shall be considered reasonable provided:

(1) ­ (3) (No change.)

(4) no more than one fee per licensed pharmacy is charged by an HMO for processing an application or recertification for participation as a contracted [ contract ] provider under more than one group or individual contract or in more than one HMO delivery network; and

(5) no more than one fee per licensed pharmacy is charged by any HMO or insurer within the same insurance holding company system, as defined in [ the ] Insurance Code §843.002 [ ,Article 21.49-1, §2 ], utilizing common networks.

(c) An HMO shall not require any pharmacy or pharmacist participating or applying to participate as a contracted [ contract ] provider in an HMO delivery network:

(1) to provide financial statements to the HMO; and

(2) to deposit with the HMO any monies or other form of consideration, except for reasonable application and recertification fees.

SUBCHAPTER P. Prohibited Practices

§11.1500. Discrimination Based on Health Status-Related Factors.

[ (a) ] An HMO may not require an enrollee in a group health plan to pay a premium or contribution that is different from [ grater than ] the premium or contribution for a similarly situated enrollee based on a health status-related factor. For purposes of this section, the term "similarly situated" has the meaning assigned to it in 45 CFR §146.121, relating to prohibiting discrimination against participants and beneficiaries based on a health factor.

[ (b) ] An HMO may not establish policies or procedures that are [ charge different premiums or contributions ] based on health status-related factors for the eligibility of any individua l to enroll [ enrollees ] under a group [ health ] plan.

SUBCHAPTER Q. Other Requirements

§11.1600. Information to Prospective and Current [ Group] Contract Holders and Enrollees.

(a) An HMO shall provide an accurate written description of health care plan terms and conditions[ ; ] to allow any prospective [ or current group] contract holder or [ and prospective] enrollee [ eligible for enrollment in a health care plan] or [ a ] current contract holder or enrollee to make comparisons and informed decisions before selecting among health care plans. By agreement, the HMO may deliver the required description of health care plan terms required by this section electronically.

(b) The written or electronic plan description must be in a readable and understandable format that meets the requirements of §3.602 of this title (relating to Plain Language Requirements), by category, and must include a clear, complete and accurate description of these items in the following order:

(1) (No change.)

(2) a toll-free number, unless exempted by statute or rule, and address [ for the prospective or current group contract holder or prospective or current enrollee ] for obtaining additional information, including provider information;

(3) - (10) (No change.)

(11) a current list of physicians and providers, including behavioral health providers and substance abuse treatment providers, if applicable , updated on at least a quarterly basis . The list shall include the information necessary to fully inform prospective or current enrollees about the network , including names and locations of physicians and providers, a statement of limitations of accessibility and referrals to specialists, including any limitations imposed by a limited provider network, and a disclosure of which physicians and providers will not accept new enrollees or participate in closed provider networks serving only certain enrollees. [ If an HMO limits enrollees´ access to a limited provider network, it shall provide the following information to prospective and current group contract holders and enrollees: ]

(A) If an HMO limits enrollees' access to a limited provider network, it shall provide to prospective and current group contract holders and enrollees < /u> a notice in substantially the following form: "Choosing Your Physician--Now that you have chosen XYZ Health Plan, your next choice will be deciding who will provide the majority of your health care services. Your Primary Care Physician or Primary Care Provider (PCP) will be the one you call when you need medical advice, when you are sick and when you need preventive care such as immunizations. Your PCP is also part of a "network" or association of health professionals who work together to provide a full range of health care services. That means when you choose your PCP, you are also choosing a network and in most instances you are not allowed to receive services from any physician or health care professional , including your obstetrician-gynecologist (OB-GYN), that is not also part of your PCP's network. You will not be able to select any physician or health care professional outside of your PCP's network, even though that physician or health care provider is listed with your health plan. The network to which your PCP belongs will provide or arrange for all [ All ] of your care [ will be provided by or arranged for within the network to which your PCP belongs ], so make sure that your PCP's network includes the specialists and hospitals that you prefer."

[ (B) If an HMO opts to limit a female enrollee's designation of an obstetrician or gynecologist to the limited provider network to which that enrollee's primary care physician or primary care provider belongs, a notice in substantially the following form: "ATTENTION FEMALE ENROLLEES: Your Choice of Physician or Provider Affects your Choice of OB/GYN--In selecting your Primary Care Physician or Primary Care Provider (PCP), remember that your PCP's network affects your choice of an OB/GYN. You have the right to designate an OB/GYN to whom you have access without first obtaining a referral from your PCP. However, if you choose to designate an OB/GYN, the OB/GYN you designate must belong to the same network as your PCP. This is another reason to make certain that your PCP's network includes the specialists, particularly the OB/GYN and hospitals that you prefer. You are not required to designate an OB/GYN; you may elect to receive your OB/GYN services from your PCP." ]

(B) [ (C) ] If an HMO does not limit an enrollee´s selection [ designation ] of an obstetrician or gynecologist to the limited provider network to which that enrollee´s primary care physician or [ primary care ] provider belongs, it shall provide to current or prospective enrollees a notice in compliance with Insurance Code Article 21.53D in substantially the following form: "ATTENTION FEMALE ENROLLEES: [Although your choice of Primary Care Physician or Primary Care Provider (PCP) in most cases limits your selection of specialists and hospitals to those specialists and hospitals that belong to your PCP's network, such is not the case in your choice of an OB/GYN.] You have the right to select [designate] an OB-GYN [OB/GYN] to whom you have access without first obtaining a referral from your PCP. (Name of HMO) has opted not to limit your selection of an OB-GYN [OB/GYN] to your PCP´s network. You are not required to select [designate ] an OB-GYN [ OB/GYN ]; you may elect to receive your OB-GYN [ OB/GYN ] services from your PCP."

(C) [ (D) ] An HMO shall clearly differentiate limited provider networks and open networks within its service area by providing [ assigning different colors, symbols, or other distinguishing marks to each network . An HMO shall provide ] a separate listing of its limited provider networks and an alphabetical listing of all the physicians and providers , including specialists, available in the limited provider network. [ Specialists shall be listed by city in alphabetical order by specialty. ] An HMO shall include an index of the alphabetical listing of all physicians and providers, including behavioral health providers and substance abuse treatment providers, if applicable , within the HMO's service area [ shall be included ], and shall indicate [ includ e the name, the color, symbol or other distinguishing mark indicating ] the limited provider network(s) to which the physician or provider belongs, and the page number where the physician or provider's name can be found.

(D) An HMO shall provide notice regarding payment of non-contracted physicians and providers that perform either emergency services or medically necessary covered services due to the unavailability of a participating physician or provider. Consistent with § 11.1607(i) of this title (relating to Accessibility and Availability Requirements) and §11.506(10)(D) of this title (relating to Mandatory Contractual Provisions: Group, Individual, and Conversion Agreement, and Group Certificate), the notice shall inform enrollees that the HMO will ind emnify or otherwise hold them harmless for such services.

(E) An HMO that maintains an internet site shall include on its internet site the information as required in subparagraphs (A) - (D) of this paragraph.

(12) the service area.

(c) No HMO, or representatives thereof, may cause or knowingly permit the use or distribution of [ prospective ] enrollee information which is untrue or misleading.

(d) An HMO may utilize its handbook to satisfy the requirements of this section if the information contained in the handbook is substantially similar to and provides the same level of disclosure as the written or electronic description prescribed by the commissioner and contains all the information required under subsection (b) of this section.

(e) If an HMO or limited provider network provides for an enrollee's care by a physician other than the enrollee's primary care physician while the enrollee is in an inpatient facility (e.g., hospital or skilled nursing facility), the plan description must disclose that upon admission to the inpatient facility, a physician other than the primary care physician may direct and oversee the enrollee's care.

(f) An HMO that maintains an internet site shall list the information as required by this paragraph and Insurance Code §843.2015 on its internet site.

§11.1601. Enrollee Identification Cards.

(a) If an HMO issues identification (ID) cards to enrollees, the [ allows physicians or providers to require that enrollees present an identification (ID) card in order to receive services, that] HMO shall issue the [to an enrollee an ] ID cards [ card ] within 30 calendar days of receiving notice of the enrollee´s selection [ designation ] of a primary care ph ysician. The enrollee ID card will include, at a minimum, all necessary information to allow an enrollee to access all services under the certificate or evidence of coverage which require presentation of the card.

(b) All ID cards an HMO issues shall comply with the requirements of §21.2820 of this title (relating to Identification Cards).

(c) If an evidence of coverage provides benefits for prescription drugs, an HMO shall issue an ID card in compliance with §§21.3002 - 21.3004 of this title (relating to Definitions; Pharmacy Identification Cards, Issuance of Standard Identification Cards, and Previously Issued Identification Cards).

(d) All ID cards issued by an HMO shall comply with the requirements of Business and Commerce Code Section 35.58, which restricts the display of social security numbers on ID cards.

§11.1602. Access to Certain Information.

(a) (No change .)

(b) The HMO shall provide, at its own expense, an enrollee handbook and materials relating to the complaint and appeal process and the availability of the independent review process in the language of the major population of the HMO´s enrolled population pursuant to [ the ] Insurance Code §843.205 [ Article 20A.11A ].

(c) (No change.)

§11.1604. Requirements for Certain Contracts between Primary HMOs and ANHCs and Primary HMOs and Provider HMOs. A primary HMO that enters into a contract with an ANHC in which the ANHC agrees to arrange for or provide health care services, other than medical care or services ancillary to the practice of medicine, or a provider HMO in which the provider HMO agrees to arrange for or provide health care services on a risk-sharing or capitated risk arrangement on behalf of the primary HMO as part of the primary HMO delivery network shall:

(1) (No change.)

(2) file with the Texas Department of Insurance, pursuant to §11.301(5) of this title (relating to Filing Requirements [ Filings for Information ]), a copy of the form of the written agreement with an ANHC or provider HMO that:

(A) requires that [ the agreement cannot be terminated by ] the ANHC or provider HMO cannot terminate the agreement without 90 days written notice;

(B) contains a hold-harmless provision that prohibits [ providing that ] the ANHC or provider HMO and its contracted physicians and providers [ are prohibited ] from billing for or attempting to collect from HMO members (except for authorized co-payments and deductibles) charges for covered services under any circumstance, including the insolvency of the primary HMO, ANHC or provider HMO;

(C) (No change.)

(D) includes the ANHC's or provider HMO's acknowledgment and agreement that:

(i) ­ (ii) (No change.)

(iii) the primary HMO may take [ whatever action is deemed ] necessary action to assure that all HMO systems and functions which are delegated or assigned under the contract with the ANHC or provider HMO are in full compliance with all regulatory requirements of the Texas Department of Insurance;

(E) ­ (F) (No change.)

(G) requires the ANHC or provider HMO to provide the primary HMO on at least a monthly ba sis, in a usable form necessary for audit purposes, the data necessary for the HMO to comply with the Texas Department of Insurance, and Texas Health Care Council reporting requirements with respect to any services provided pursuant to the HMO-ANHC or HMO-provider HMO agreement, including the following data:

(i) ­ (xi) (No change.)

(xii) documentation of any inquiry and/or [ inquiries and ] investigation of the ANHC or provider HMO, or any individual subcontracting physician or provider, made by regulatory agencies, and documentation of the final resolution of such an inquiry and/or investigation; and

(xiii) any other data necessary to assure proper monitoring and control of the primary HMO delivery network by the primary HMO;

(3) ­ (4) (No change.)

§11.1605. Pharmaceutical Services.

(a) Should an HMO provide prescription drug coverage, such coverage shall be subject to copayments for both generic drugs and name brand drugs. If the negotiated or usual or customary cost of the drug is less than the copayment, the enrollee shall pay the lower cost. The copayments may be the same, or if different, shall be applied as follows:

(1) if the prescription is for a generic drug, the enrollee shall pay no more than the generic copayment;

(2) if the prescription is for a name brand drug, the enrollee shall pay no more than the name brand copayment if:

(A) the prescription is written "Dispense as written"; or

(B) there is no generic equivalent for the prescribed drug;

(3) if the prescription is written "product selection permitted" and the enrollee elects to receive a name brand drug when a generic equivalent is available, the enrollee shall pay no more than the generic copayment plus the difference between the cost of the generic drug and the cost of the name b rand drug.

(4) if the enrollee´s prescription benefit requires the use of generic equivalent drugs ("required generic") and the enrollee receives a name brand drug when a generic equivalent is available, the enrollee shall pay no more than the generic copayment plus the difference betweenthe cost of the generic drug and the cost of the name brand drug, even when the prescription is written "dispense as written."

(b) Pharmacy services, if offered, shall be available and accessible within the service area for the enrolled population through pharmacies licensed by the Texas State Board of Pharmacy. The HMO shall offer such pharmacy services directly or through contracts.

(c) An HMO that provides coverage for prescription drugs under an individual or group health benefit plan shall comply with the requirements of Insurance Code Article 21.53M, and §21.301 0 and §21.3011 of this title (relating to Definitions; Coverage of Off-Label Drugs and Minimum Standards of Coverage for Off-Label Drugs).

(d) An HMO that provides coverage for prescription drugs or devices under an individual or group state-mandated health benefit plan shall comply with the requirements of Insurance Code Article 21.52L (Health Benefit Plan Coverage for Prescription Contraceptive Drugs and Devices and Related Services).

(e) An HMO that provides coverage for prescription drugs under a group state-mandated health benefit plan and that utilizes one or more drug formularies to specify which prescription drugs the plan will cover shall comply with the requirements of Insurance Code Article 21.52J and §§21.3020 - 21.3023 of this title (relating to Definitions; Prescription Drug Formulary, Required Disclosure of Drug Formulary, Continuation of Benefits, and Nonformulary Prescription Drugs; Adverse Determination).

§11.1606. Organization of an HMO.

(a) The governing body as described in [ the ] Insurance Code §843.004 [ Article 20A.07 ] , shall have ultimate responsibility [ be responsible ] for the development, approval, implementation and enforcement of administrative, operational, personnel and patient care policies and [ , ] procedures [ and ] related to [ documents for ] the operation of the HMO.

(b) The HMO shall have [ provide ] a [ full time ] chief executive officer or operations officer who shall be accountable for the administration of the health plan, including: [ and at least one full-time medical director; and if a limited service health care plan or single service health care plan, a full-time director, who is available with a service area. ]

(1) developing corporate strategy;

(2) overseeing marketing programs;

(3) overseeing medical management functions; and

(4) ensuring compliance with all applicable statutes and rules pertaining to the operations of the HMO.

(c) The HMO shall have a clinical director who:

(1) shall be currently licensed in Texas or otherwise authorized to practice in this state in the field of services offered by the HMO. For example:

(A) a basic HMO shall have a physician;

(B) a dental HMO shall have a dentist or physician;

(C) a vision HMO shall have an optometrist or physician; and

(D) a limited services HMO shall have a physician.

(2) shall reside in the state of Texas ;

(3) shall be available at all times to address complaints, clinical issues, utilization review and any quality of care issues on behalf of the HMO;

(4) shall demonstrate active involvement in all quality management activities; and

(5) shall be subject to the HMO´s credentialing requirements, as appropriate.

(d) [ (c) ] The HMO may establish one or more service areas within Texas . Each defined service area must [ meet the following ]:

(1) demonstrate to the department the ability to provide continuity, accessibility, availability, and quality of services;

(2) specify the counties and zip codes, or any portions thereof, included in the service area;

(3) provide a complete physician and provider listing for all enrollees residing, living or working in the service area; and

(4) maintain separate cost center accounting for each service area to facilitate the reporting of divisional operations as required for HMO financial reporting.

[ (d) The HMO shall ensure the service area maintains the following: ]

[ (1) if a basic health care service plan, a medical director, and if a limited health care service plan or a single health care service plan, a director who: ]

[ (A) shall be currently licensed in Texas or otherwise authorized to practice in this state in the field of services offered by the HMO; ]

[ (B) shall reside in the service area; and ]

[ (C) may serve in a part-time capacity and shall be available at all times to each service area. However, the medical director or a physician designee or single service director or designee meeting the criteria described in subparagraphs (A) and (B) of this paragraph, shall be available at all times to address complaints, clinical issues, utilization review and any quality of care inquiries on behalf of the HMO. ]

[ (2) compliance with all requirements for quality improvement and utilization review functions as described in Subchapter T of this chapter (relating to Quality of Care). ]

§11.1607. Accessibility and Availability Requirements.

(a) Each health benefit plan delivered or issued for delivery by an HMO must include an HMO delivery network which is adequate and complies with Insurance Code §843.082.

(b) There shall be a sufficient number of primary care physicians and specialists with hospital admitting privileges to participating facilities who are available and accessible 24 hours per day, seven days per week, within the HMO´s service area to meet the health care needs of the HMO´s enrollees.

(c) An HMO shall make general, special, and psychiatric hospital care available and accessible 24 hours per day, seven days per week, within the HMO's service area.

(d) If an HMO limits enrollees' access to a limited provider network, it mus t ensure that such limited provider network complies with the provisions of this section.

(e) An HMO shall make emergency care available and accessible 24 hours per day, seven days per week, without restrictions as to where the services are rendered.

(f) All covered services that are offered by the HMO shall be sufficient in number and location to be readily available and accessible within the service area to all enrollees.

(g) HMOs must arrange for covered health care services, including referrals to specialists, to be accessible to enrollees on a timely basis upon request and consistent with guidelines set out in paragraphs (1) - (3) of this subsection:

(1) Urgent care shall be available:

(A) within 24 hours for medical and dental conditions; and

(B) within 48 hours for behavioral health conditions.

(2) Routine care shall be available:

(A) within three weeks for medical conditions;

(B) within eight weeks for dental conditions; and

(C) within two weeks for behavioral health conditions.

(3) Preventive health services shall be available:

(A) within two months for a child;

(B) within three months for an adult; and

(C) within four months for dental services.

(h) An HMO is required to provide an adequate network for its entire service area. All covered services must be accessible and available so that travel distances from any point in its service area to a point of service are no greater than:

[ (a ) An enrollee shall not be required to: ]

(1) [ travel in excess of ] 30 miles for [ from the site of eligibility to reach a ] primary care [ physician ] and general hospital care [except as provided in subsections (b) and (c) of this section ]; and

(2) [ travel in excess of ] 75 miles for [ from the site of eligibility to secure contact with referral specialists, ] specialty care. [ hospitals, psychiatric hospitals, diagnostic and therapeutic services, and single or limited service health care physicians or providers except as provided in subsections (b) and (c) of this section; ]

[ (3) for purposes of this subsection, "site of eligibility" refers to the location which makes the subscriber eligible for coverage ].

(i) [ (b) ] If any covered health care service or a participating physician and provider is not available to an enrollee within the mileage radii specified in subsection (h)(1) [ (a) (1) ] and (2) of this section because physicians and providers are not located within such mileage radii, or if the HMO is unable to obtain contracts after good faith attempts, or physicians and providers meeting the minimum quality of care and credentialing requirements of the HMO are not located within the mileage radii, the HMO shall submit an access [ a ] plan to the department for approval, at least 30 days before implementation in accordance with the filing requirements in §11.301 of this title (relating to Filing Requirements) . The access plan shall include the following:

(1) the geographic area identified by county, city, ZIP code, mileage, or other identifying data in which services and/or physicians and providers are not available;

(2) for each geographic area identified as not having covered health care services and/or physicians or providers available, the reason or reasons that covered health care services and/or physicians and providers cannot be made available;

(3) a map, with key and scale, which identifies the areas in which such covered health care services and/or physicians and providers are not available;

(4) the HMO's [ general ] plan for making covered health care services and/or physicians and providers available to enrollees in each geographic area identified , which shall include an explanation of the HMO´s plan to ensure that enrollees are indemnified or otherwise held harmless when non-participating physicians and providers provide services to enrollees due to the unavailability of the service from a physician or provider in the HMO´s network or network facility ;

(5) the names and addresses of the participating physicians and providers and a listing of the covered health care services to be provided through the HMO delivery network to meet the medical needs of the enrollees covered under the HMO's [ general ] plan required under paragraph (4) of this subsection;

(6) the names and address of other physicians and provide rs and a listing of the specialties for any other health care services or physicians and providers to be made available in the geographic area in addition to those physicians and providers participating in the HMO delivery network listed under paragraph (5) of this subsection;

(7) [ a general description of ] the [ day to day ] procedures to be followed by the HMO to assure that primary care physicians, general hospitals, [ referral ] specialists, special hospitals, psychiatric hospitals, diagnostic and therapeutic services, or single or limited health care service providers and all other mandated health care services are made available and accessible to enrollees in the geographic areas identified as being areas in which such covered health care services and/or physicians and providers are not available and accessible, and any plans of the HMO for attempting to develop an HMO delivery network through which covered health care services are available and accessible to enrollees in these geographic areas in the future; and

(8) any other information which is necessary to assess the HMO's plan.

(j) [ (c) ] The HMO may make [ is not precluded from making ] arrangements with physicians or providers outside the service area for enrollees to receive a higher level of skill or specialty than the level which is available within the HMO service area such as, but not limited to, transplants, treatment of cancer, burns, and cardiac diseases. An HMO may not require an enrollee to travel out of the service area to receive such services, unless the HMO provides the enrollee with a written explanation of the benefits and detriments of in-area and out-of-area options.

[ (d) The HMO shall require the HMO physicians and other providers of care who employ physician assistants, advanced practice nurses, dental hygienists and individuals other than physicians to assess the health care needs of HMO enrollees to have written policies which are implemented and enforced and describe the duties of all such providers in accordance with statutory requirements for licensure, delegation, collaboration, and supervision as appropriate .]

[(e) The HMO shall systematically and regularly verify that health care services furnished by physicians and providers of care such as dentists and physical therapists are available and accessible to enrollees without unreasonable periods of delay.]

[ (f) The HMO shall develop and maintain a statistical reporting system which allows for compiling, developing, evaluating, and reporting statistics relating to the cost of operation, the pattern of utilization of its services, and the availability and accessibility of it services .]

[(g) Each health benefit plan delivered or issued for delivery by an HMO must include an HMO delivery network which is adequate and complies with the Insurance Code Article 20A.05(a)(1).]

(k) [ (h )] The HMO shall not be required to expand services outside its service area to accommodate enrollees who live outside the service area, but work within the service area.

(l) [ (i) ] In accordance with Insurance Code Article 21.53F (Telemedicine), each [ Each ] evidence of coverage or certificate delivered or issued for delivery by an HMO may provide enrollees the option to access covered health care services through a telehealth service or a telemedicine medical service.

[ (j) Before providing telehealth services or telemedicine medical services to an enrollee, an HMO shall provide the enrollee with the option to select a physician or provider within the HMO delivery network to provide the covered health care services, or to elect to receive telehealth services or telemedicine medical services. ]

[ (k) In order to provide covered health care services to any enrollee by a telehealth service or a telemedicine medical service, an HMO shall satisfy the criteria specified under subsection (a) of this section. ]

SUBCHAPTER R. Approved Nonprofit Health Corporations

§11.1702. Requirements for Issuance of Certificate of Authority to ANHC.

(a) Prior to obtaining a certificate of authority under [ the ] Insurance Code, Chapter 844 [ Article 21.52F ] (concerning Certification of Certain Nonprofit Health Corporations), an applicant ANHC must:

(1) comply with each requirement for the issuance of a certificate of authority imposed on an HMO under [ the ] Insurance Code, Chapters [ Chapter ] 20A and 843 ; this chapter [ title, Chapter 11 ]; and applicable insurance laws and regulations of this state; and

(2) (No change.)

(b) The commissioner shall grant a provisional certificate of authority to an applicant ANHC under [ the ] Insurance Code, Chapter 844 [ Article 21.52F, §4(b) ], if:

(1) the applicant ANHC complies with each requirement for the issuance of a certificate of authority imposed on an HMO under [ the ] Insurance Code, Chapters [ Chapter ] 20A and 843 ; this chapter [ title, Chapter 11 ]; and applicable insurance laws and regulations of this state;

(2) the applicant ANHC demonstrates that it has applied for accreditation;

(3) - (4) (No change.)

(c) An ANHC with a certificate of authority or a provisional certificate of authority must comply with all the appropriate requirements that an HMO must comply with under [ the ] Insurance Code, Chapters [ Chapter ] 20A and 843 ; this chapter [ title, Chapter 11 ]; and applicable insurance laws and regulations of this state in order to maintain a certificate of authority.

(d) This subchapter does not apply to an activity exempt from regulation under Insurance Code, Chapters 843 and 844 [ Articles 21.52F(2) and 20A.26(f) ], including an ANHC that contracts to arrange for or provide only medical care as defined in Insurance Code §843.002 [, Article 20A.02(k) ].

§11.1703. Requirements for Agents of an ANHC Certificate of Authority Holder. Any agent for an ANHC with a certificate of authority or a provisional certificate of authority shall be considered an HMO agent and shall comply with the requirements of [ the ] Insurance Code Article 21.07-1 and Chapter 19 of this title (relating to Agent´s Licensing) [ , Article 20A.15 or Article 20A.15A ], as applicable[ , and §§11.401-11.409 of this title (relating to Licensure and Regulation of HMO Agents) ].

§11.1704. Statutes and Rules Applicable to ANHC with a Certificate of Authority. An ANHC with a certificate of authority or provisional certificate of authority under Insurance Code, Chapter 844 [ Article 21.52F ], and this subchapter shall be subject to the same statutes and rules as an HMO and considered an HMO for purposes of regulation and regulatory enforcement.

SUBCHAPTER S. Solvency Standards for Managed Care

Organizations Participating in Medicaid

§11.1801. Entities Covered.

(a) As used in this subchapter, a managed care organization is an entity holding a certificate of authority to operate as an HMO under Chapters [ Chapter ] 20A and 843 of the Texas Insurance Code or as an approved nonprofit health corporation under Chapter 844 [ Article 21.52F ] of the Texas Insurance Code.

(b) Any managed care organization or other entity providing the services specified in 42 United States Code §1396b(m)(2)(A) and participating in the State Medicaid Program (all hereinafter referred to as an [ a ] "MCO") must first comply with the requirements and solvency standards set forth in this subchapter, and must not be in a hazardous financial condition as defined in §843.406 [ Article 20A.19 ] of the Texas Insurance Code , §11.810 of this title (relating to Hazardous Conditions for HMOs), or Chapter 8 of this title (relating to Early Warning System for Insurers in Hazardous Condition) where pertinent to managed care organizations. In addition, any MCO already subject to regulation of any kind, must be in compliance with any solvency standard and/or requirement pertinent to its regulation, as well as all applicable licensing laws and regula tions.

[ (c) Notwithstanding any other provision in this subchapter, if an MCO had a Medicaid contract in effect immediately prior to August 1, 1996 and if that MCO is subject to this subchapter, then that MCO must comply with the requirements in this subchapter within one year after becoming subject to this subchapter. ]

§11.1802. Minimum Surplus or Net Worth.

(a) An [ Subject to the reduction specified in §11.1804 of this title (relating to Guarantees) and the exception specified in §11.1801 of this title (relating to Entities Covered), an ] MCO must possess the greater of:

(1) the statutory minimum capital and surplus (net worth) required of an MCO in accordance with the types of business that the MCO is authorized to write [ $1.5 million for a bas ic service MCO, $1.0 million for a limited service MCO, and $500,000 for a single service MCO of admitted assets in excess of all liabilities plus sufficient capital of a nature acceptable to the department to cover 12 months of reasonably projected losses, with the 12 months beginning from the date of inception of the initial Medicaid contract executed with the MCO which is subject to this subchapter ]; or

(2) a minimum surplus or net worth equal to no less than the regulatory action level of risk based capital (150% of its authorized control level risk based capital) in accordance with the formula adopted by the commissioner pertaining to the MCO subject to the following phase-in:

(A) at December 31, 2005 , the minimum net worth shall be equal to no less than 100% of the authorized control level risk based capital,

(B) at December 31, 2006, the minimum net worth shall be equal to no less than 125% of the authorized control level risk based capital, and

(C) at December 31, 2007, the minimum net worth shall be equal to no less than 150% of the authorized control level risk based capital [ a minimum net worth equal to $25 per existing enrollee plus the number of reasonably projected enrollees for the next 12 months, which projection may not be a negative number ].

(b) If at any time the MCO discovers that it does not meet its minimum net worth requirement, the MCO shall immediately fund capital sufficient to cure the impairment. [ In addition, an MCO must infuse capital in a form acceptable to the department at the end of every six months to fund any losses in excess of its originally projected losses or to maintain the $25 per enrollee requirement provided above. ]

§11.1803. Statutory Deposits.

(a) [ As used in this section, "uncovered health care expenses" means the estimated cost of health care services that are not guaranteed, insur ed, or assumed by a person other than the MCO. ]

[ (b) ] In addition to amounts already deposited in accordance with other statutory and regulatory provisions, and subject [ Subject ] to the reduction specified in §11.1804 of this title (relating to Guarantees), an MCO must [ have on ] deposit with the Office of the Comptroller of Public Accounts of Texas [ the greater of ]:

(1) $400,000 [ $500,000 ] if a basic service MCO;

(2) $275,000 [ $375,000 ] if a limited service MCO; or

(3) $200,000 [ $250,000 ] if a single service MCO . [ ; or ]

[ (2) an amount equal to uncovered health care expenses incurred for the previous calendar year. If an MCO has not existed for a full calendar year, then this amount must equal the reasonably projected uncovered health care expenses for the first 12 months of operation. ]

(b) [ (c) ] This deposit may be used to protect the interests of the enrollees of the MCO, including but not limited to the payment of the costs delineated in §11.1805(a)(2)(C) of this title (relating to Performance and Fidelity Bonds) [ or related to uncovered health care services ]. Any deposit is subject to the procedures set forth in §11.802 of this title (relating to Statutory Deposit Requirements).

§11.1804. Guarantees.

(a) As used in this section, the phrase "certified audited financial statements" means financial statements audited by a CPA utilizing generally accepted auditing standards that [ which ] attest that the financial condition of the MCO is fairly represented in accordance with generally accepted accounting principles; and the phrase "section 1115 waiver expansion program" means the Medicaid program involving children of the ages 6-18 years in a socio-economic level of up to 133% over the federal poverty level and who are not eligible under the regular Medicaid program.

(b) If a guarantee issued for the benefit of an MCO satisfies the conditions and requirements set forth in this section, then the additional deposit amounts specified in §11.1803(a)(1) of this title (relating to Statutory Deposits) [ requirements ] shall be reduced to the following amounts [ as follows ]:

FIGURE: 28 TAC §11.1804(b):

Additional Statutory Deposit Required

Type of HMO

Basic Service MCO$150,000

Limited Service MCO$100,000

Single Service MCO$ 75,000

[ Reduction in Net Worth ][ Reduction in Statutory Deposit ]

[ Type of HMO ]

[ Basic Service MCO ][ $500,000 ][ $250,000 ]

[ Limited Service MCO ][ $300,000 ][ $190,000 ]

[ Single Service MCO ][ $125,000 ][ $125,000 ]

If and only if a guarantee issued for the benefit of an MCO satisfies the conditions and requirements set forth in subsection (c)(2)(B) in this section and if the MCO participates solely in the section 1115 waiver expansion program controlled and as defined by the State Medicaid Office for Texas, and is determined by the commissioner to be such an MCO, then [ the $1.5 million figure required by §11.1802(a)(1) of this title (relating to Minimum Surplus or Net Worth) is reduced to $500,000 and ] the $400,000 [ $500,000 ] figure required by §11.1803(a)(1) [ §11.1803(b)(1) ] of this title (relating to Statutory Deposits) is reduced to $100,000 [ $100,00 ]. [ Provided, however, if the requirements of HMOs mandated by the Insurance Code Article 20A.13 §(b)(i) and §(b)(j) are increased by the Texas Legislature, then the reductions provided in this section shall increase to the levels required by the Texas Legislature upon the effective date provided in any such amendment. ]

(c) (No change.)

(d) If at any time a guarantee issued for the benefit of an MCO does not comply with every requirement of this section, then the reductions provided for in this section terminate and the amounts stated in §11.1803 [ §11.1802(a) ] of this title [ (relating to Minimum Surplus or Net Worth) and §11.1803(b) of this title (relating to Statutory Deposits) ] immediately apply to the MCO.

§11.1805. Performance and Fidelity Bonds.

(a) (No change.)

(b) In addition, an MCO must maintain the fidelity bonds required by and comply with [ the ] Insurance Code §843.402 [ Article 20A.30 ].

§11.1806. Additional Information That May be Requested From [ to be Submitted by ] an MCO Participating in Medicaid.

(a) Whenever requested by the department [ Within 30 days after the end of each reporting period ], the MCO shall file a complete set of financial exhibits pertaining to the state Medicaid program, in the format of the Managed Care Financial Statistical Report, as may be modified or amended by the Texas [ Department of ] Health and Human Services Commission . When a request is received, the [ The ] MCO shall then file, on two separate occasions, an original Managed Care Financial Statistical Report reflecting the state Medicaid program operations for each contract year in the same format as the monthly Managed Care Financial Statistical Report. The first annual report shall reflect data completed through the 90th day after the end of the contract year, and shall be submitted within 120 days after the end of the contract year. The second annual report shall reflect data completed through the 270th day after the end of the contract year, and shall be submitted 300 days after the end of the contract year. The second (final) report shall be accompanied by a written opinion from a CPA attesting to the fact that the subject report presents fairly, in all material respects, the financial and statistical results of the contract´s state Medicaid program operations for the period stated therein, in conformity with generally accepted accounting principles consistently applied throughout th e reported period(s).

(b) For any new or modified request to the Texas Health and Human Services Commission for participation in the Medicaid managed care program, all financial projections, including enrollment projections, from the effective or renewal date of a Medicaid contract that are submitted to the Texas Health and Human Services Commission are also required to be submitted to the Texas Department of Insurance. The MCO shall submit the same financial projections, including a cash flow statement, submitted to the Texas [ Department of ] Health and Human Services Commission with the request to participate in the Medicaid program [ for application (RFA) ]. This information shall be submitted with the certificate of authority if the MCO is not already a licensed MCO. If the MCO is a licensed operation , then the financial projections must [ should ] be sent with the next financial statement due to the department.

(c) The MCO shall notify the department of any [ Any ] similar financial or statistical reports required by other contracting state agencies and shall submit copies of these reports, when requested by [ also be submitted to ] the department [ in the same manner as described in subsections (a) and (b) of this section ].

(d) Information submitted pursuant to this section shall be sent to the Texas Department of Insurance, Financial Analysis & Examinations [Monitoring Unit], Mail Code 303-1A, P.O. Box 149104, Austin,Texas 78714-9104.

SUBCHAPTER T Quality of Care

§11.1901. Quality Improvement Structure for Basic and Limited Services HMOs .

(a) A basic or limited services [ The ] HMO shall develop and maintain an ongoing quality improvement (QI) program designed to objectively and systematically monitor and evaluate the quality and appropriateness of care and services and to pursue opportunities for improvement.

(b) The [ HMO ] governing body is ultimately responsible for the QI [overall quality improvement ] program. The [ HMO ] governing body shall:

(1) appoint a quality improvement committee (QIC) that shall include practicing physicians, individual providers and at least one enrollee from throughout the HMO's service area. For purposes of this section, the enrollee appointed to the committee may not be an employee of the HMO;

(2) approve the QI [ quality improvement ] program;

(3) approve an annual QI [ quality improvement ] plan;

(4) meet no less than annually to receive and review reports of the QIC [ quality improvement committee ] or group of committees and take action when appropriate; and

(5) review the annual written report on the QI [ quality improvement ] program.

(c) The QIC [ quality improvement committee ] shall [ develop and ] evaluate the overall effectiveness of the QI [ quality improvement ] program.

(1) The QIC [ quality improvement committee ] may delegate QI [ quality improvement ] activities to other committees that may, if applicable, include practicing physicians and [ , ] individual providers, and enrollees from [ throughout ] the service area.

(A) All committees shall collaborate and coordinate efforts to improve the quality, availability, and accessibility of health care services [ to be furnished by the HMO to its enrollees ].

(B) All committees shall meet [ and ] regularly and report the findings of each meeting , including any recommendations, [ and resolutions ] in writing to [ through ] the QIC [ qualify improvement committee for the HMO governing body ].

(C) If the QIC [ quality improvement committee ] delegates any QI [ quality improvement ] activity to any subcommittee, then the QIC [ quality improvement committee ] must establish a method to oversee [ of oversight of ] each subcommittee.

(2) The QIC [ quality improvement committee ] shall use multidisciplinary teams, when indicated, to accomplish QI [ quality improvement ] program goals.

§11.1902. Quality Improvement Program for Basic and Limited Services HMOs . The QI [ quality improvement ] program for basic and limited services HMOs shall be continuous and comprehensive, addressing [ including ] both the quality of clinical care and the quality of services [ service ]. The HMO shall dedicate adequate resources , such as personnel and information systems , [ a nalytic capabilities, and data resources ] to the QI [ quality improvement ] program. [ The HMO shall continuously update and monitor the quality improvement program. ]

(1) Written description. The QI program [ There ] shall include [ be ] a written description of the QI [ quality improvement ] program that outlines program organizational structure, functional responsibilities, [ responsibility ] and meeting frequency [ design ].

(2) Work plan. The QI program [ There ] shall include [ be ] an annual QI [ quality improvement ] work plan [ that includes a schedule of activities ] designed to reflect the type of services and the population served by the HMO in terms of age groups, disease categories, and special risk status. The work plan shall include [ but not be limited to the following ]:

(A) Objective and measurable goals; [ Goals, objectives , a nd ] planned [ projects or ] activities to accomplish the goals; [ identified from the previous year, as well as for the current year ] time frames for implementation; responsible individuals; and evaluation methodology [ coordination of functions ].

[ (B) Use of quality indicators, performance measurements, and quality improvement data collection to monitor quality improvement. ]

[( i) Quality indicators must be objective, measurable, and include performance goals for each indicator. ]

[ (ii) Performance measures must be process or outcome measures. ]

[ (iii) Data collected must be appropriate to the goals and objectives of the activity. ]

[ (C) Ongoing or periodic assessment of both quality of clinical care and quality of service in planned projects, specifically: ]

(B) The work plan shall address each program area, including:

(i) ­ (ii) (No change.)

(iii) Clinical studies[ , which shall specify methodologies to be used to accomplish them ];

(iv) The adoption and periodic [ annual ] updating of clinical practice guidelines or clinical care standards[ , compatible with current principles of health care ]; the QI [ quality improvement ] program shall assure the practice guidelines:

(I) are approved by participating physicians and individual providers;

(II) are communicated to physicians and individual providers [ included in physician and provider manuals ]; and

(III) include preventive health ser vices.

(v) Enrollee, physician, and individual provider satisfaction;

(vi) The complaint and appeals process, complaint data, and identification and removal of communication barriers that [ which ] may impede enrollees, physicians, and providers from effectively making complaints against the HMO;

(vii) Preventive health care through health promotion and outreach activities ; [ : ]

[ (I) The HMO shall inform and educate physicians and providers about using the health management and outreach programs for the enrollees assigned to them. ]

[ (II) Outreach may be accomplished through, but not limited to, written educational materials, community-based programs and p resentations, health promotion fairs, and monetary contributions to community-based organizations and health related initiatives of other programs. ]

(viii) Claims payment processes;

(ix) Contract monitoring, including delegation oversight and compliance with filing requirements; [ and ]

(x) Utilization review processes ; [ . ]

(xi) Credentialing;

(xii) Member services; and

(xiii) Pharmacy services, including drug utilization. </ p>

[(D) Ongoing or periodic analysis and evaluation of both quality of clinical care and quality of service planned projects specified in subparagraph (C) of this paragraph, which shall include: ]

[ (i) Evidence that results of evaluation are used to improve clinical care and services; and ]

[ (ii) A systematic method of tracking areas identified for improvement to assure that appropriate action is taken to effect the needed improvement .]

(3) Evaluation. The QI program [ There ] shall include [ be ] an annual written report on the QI [ quality improvement ] program, which includes completed activities, trending of clinical and service goals [ indicators ], analysis of program performance, and conclusions [, and demonstrated improvements in care and services ].

(4) Credentialing. An HMO shall implement a documented process for selection and retention of contracted physicians and providers, which includes the following elements, as applicable:

(A) The HMO's policies and procedures shall clearly indicate the physician or individual provider directly responsible for the credentialing program and shall include a description of his or her participation.

(B) HMOs shall develop written criteria for credentialing of physicians and providers and written procedures for verifications.

(i) The HMO shall credential [ Credentialing is required for ] all physicians and providers, including advanced practice nurses, and physician [ physicians' ] assistants , if they are listed in the provider directory . An HMO shall credential each physician [ Physicians ] or individual provider [ providers ] who is a member [ are members ] of a contracting group, such as an independent physician association or medical group[ , shall be credentialed individually ].

(ii) Policies and procedures must include the following physicians´ and providers´ rights:

(I) the right to review information submitted to support the credentialing application;

(II) the right to correct erroneous information;

(III) the right, upon request, to be informed of the status of the credentialing or recredentialing application; and

(IV) the right to be notified of these rights.

(iii) [ (ii) ] An HMO [ Credentialing ] is not required to credential [ for ]:

(I) hospital-based physicians or individual providers, including advanced practice nurses and physician [ physicians' ] assistants unless listed in the provider directory;

(II) individual providers who furnish services only under the direct supervision of a physician or another individual provider except as specified in clause (i) of this subparagraph ;

(III) students, residents, or fellows; [ or ]

(IV) pharmacists ; or

(V) opticians.

(iv) [ (iii) ] An HMO must complete the [ The ] initial credentialing process, including application, verification of information, and a site visit (if applicable), [ must be completed ] before the effective date of the initial contract with the physician or provider.

(v) Policies and procedures shall include a provision that applicants be notified of the credentialing or recredentialing decision no later than 60 calendar days after the credentialing committee´s decision.

(vi) [ (iv)] An HMO shall have written policies and procedures for suspending or terminating affiliation with a contracting physician or provider, including an appeals process, pursuant to [ the ] Insurance Code §§843.306 - 843.309 [ Article 20A.18A(b) ].

(vii) [ ( v) ] The HMO shall have a procedure for the ongoing monitoring of physician and provider performance between periods of recredentialing and shall take appropriate action when it identifies occurrences o f poor quality [ are identified ]. Monitoring shall include [ , but not be limited to ]:

(I) Medicare and Medicaid sanctions : the HMO must determine the publication schedule or release dates applicable to its physician and provider community; the HMO is responsible for reviewing the information within 30 calendar days of its release ;

(II) Information from state licensing boards regarding sanctions or licensure limitations; and

(III) Complaints.

[ (vi) If the HMO delegates credentialing functions to other entities, it shall have a process for developing delegation criteria and for performing pre-delegation and annual audits, a delegation agreement, a monitoring plan, and a procedure for termination of the delegation agreement for no n-performance. If the HMO delegates credentialing functions to an entity accredited by the National Committee for Quality Assurance, the annual audit of that entity is not required; however, evidence of this accreditation shall be made available to the department for review. The HMO shall maintain documentation of pre-delegation and annual audits, executed delegation agreements, reports received from the delegated entities, current rosters or copies of signed contracts with physicians and providers who are affected by the delegation agreement, and ongoing monitoring and shall make this documentation available to the department for review. Credentialing files maintained by the other entities to whom the HMO has delegated credentialing functions shall be made available to the department for examination upon request. In all cases, the HMO shall maintain the right to approve credentialing, suspension, and termination of physicians and providers. ]

(viii) [ (vii) ] The HMO´s procedures shall ensure that selection and retention criteria do not discriminate against physicians or providers who serve high-risk populations or who specialize in the treatment of costly conditions. Procedures shall also include a provision that credentialing and recredentialing decisions are not based solely on an applicant´s race, ethnic/national identity, gender, age, sexual orientation or the types of procedures or types of patients.

(ix) [ (viii)] The HMO shall have a procedure for notifying licensing or other appropriate authorities when a physician's or provider's affiliation is suspended or terminated due to quality of care concerns.

(C) Initial credentialing process for physicians and individual providers shall include[ , but not be limited to, ] the following:

(i) Physicians , advanced practice nurses and physician assistants shall complete the standardized credentialing application adopted in §21.3201 of this title (relating to the Texas Standardized Credentialing Application for Physicians , Advanced Practice Nurses and Physician Assistants ) and individual providers shall complete an application which includes a work history covering at least five years, a statement by the applicant regarding any limitations in ability to perform the functions of the position, history of loss of license and/or felony convictions; and history of loss or limitation of privileges, sanctions or other disciplinary activity, lack of current illegal drug use, current professional liability insurance coverage information, and information on whether the individual provider will accept new patients from the HMO. This does not preclude an HMO from using the standardized credentialing application form specified in §21.3201 of this title for credentialing of individual providers. The completion date on the application shall be within 180 calendar days prior to the date the credentialing committee deems a physician or individual provider eligible for initial credentialing.

(ii) The HMO shall verify the following [ shall be verified ] from primary sources and shall include evidence of verification [ shall be included ] in the credentialing files:

(I) (No change.)

(II) Education and training, including evidence of graduation from an [ the ] appropriate professional school and completion of a residency or specialty training, if applicable. Primary source verification shall be sought from the appropriate schools and training facilities or the American Medical Association [ Association's ] MasterFile. If the state licensing board, agency, or specialty board verifies education and training with the physician´s or individual provider's schools and facilities, evidence of current state licensure or board certification shall also serve as primary source verification of education and training.

(III) Board certification, if the physician or individual provider indicates that he/she is board certified on the application. The HMO may obtain primary [ Primary ] source verification [ may be obtained ] from the American Board of Medical Specialties Compendium, the American Osteopathic Association, the American Medical Association MasterFile, or from the specialty boards, and the HMO must use [ source used must be ] the most recent available source .

(IV) Valid Drug Enforcement Agency (DEA) or Department of Public Safety (DPS) Controlled Substances Registration Certificate, if applicable. These must be in effect at the time of the credentialing decision , and the HMO may verify them [ be verified ] by any one of the following means:

(-a-) ­ (-d-) (No change.)

(-e-) entry in the American Medical Association Physic ian MasterFile [ Master File ].

(iii) The HMO shall verify [ following shall be verified ] within 180 calendar days prior to the date of the credentialing decision and shall include [ also be included ] in the physician's or individual provider's credentialing file the following :

(I) Past five -year [ years of ] history of professional liability claims that resulted in settlements or judgments paid by or on behalf of the physician or individual provider, which the HMO may obtain [ may be obtained ] from the professional liability carrier or the National Practitioner Data Bank;

(II) Information on previous sanction activity by Medicare and Medicaid which the HMO may obtain [ be obtained ] from one of the following:

(-a-) ­ (-f-) (No change.)

(-g-) entry in the American Medical Association Physician MasterFile [ Master File ].

(iv) The HMO shall perform a site visit to the offices of each primary care physician or individual primary care provider , obstetrician-gynecologist, primary care dentist, and high-volume [ individual] behavioral health physician or individual provider as part of the initial credentialing process. In addition, the HMO shall have written procedures for determining high-volume [ individual] behavioral health physicians and individual providers. If physicians or individual providers are part of a group practice that [ which ] shares the same office, the HMO may perform one visit to the site [ may be used ] for all physicians or individual providers in the group practice, as well as for new physicians or individual providers who subsequently join the group practice. The HMO shall make the site visit assessment [ shall be made ] available to the department for review. The HMO shall have a process to track the opening of new physician and individual provider offices. The HMO shall pe rform a site visit of each new office site of primary care physicians and individual primary care providers, obstetrician-gynecologists, primary care dentists, and high-volume behavioral health physicians or individual providers as they open.

(v) Site visits shall consist of an evaluation of the site's accessibility, appearance, appointment availability, and space, using standards approved by the HMO. If a physician or individual provider offers services that require certification or licensure, such as laboratory or radiology services, the physician or individual provider shall have the current certification or licensure available for review at the site visit. In addition, as a result of the site visits, the HMO [ it ] shall determine [ be determined ] whether the site conforms to the HMO´s standards for record organization, documentation, and confidentiality practices. Should the site not conform to the HMO´s standards, the HMO shall require a corrective action plan and perform a follow-up site visit every six months until the site complies with the standards.

(D) The HMO shall have written procedure s for recredentialing physicians and individual providers at least every three years through a process that updates information obtained in initial credentialing[ , including professional liability coverage. The process shall also consider performance indicators for primary care and high-volume individual behavioral health care providers, including enrollee complaints and information from quality improvement activities ].

(i) Recredentialing will include a current and signed attestation that must be completed within 180 days prior to the date the credentialing committee deems a physician or individual provider eligible for recredentialing with the following factors:

(I) reasons for any inability to perform the essential functions of the position, with or without accommodation;

(II) lack of current illegal drug use;

(III) history of loss or limitation of privileges or disciplinary activity;

(IV) current professional liability insurance coverage; and

(V) correctness and completeness of the application.

(ii) Recredentialing procedures must be completed within 180 days prior to the date the credentialing committee deems a physician or individual provider eligible for recredentialing and shall include [ , but not be limited to, ] the following processes:

(I) [(i) ] Reverification of the following from the primary sources [and in accordance with the same verification time limit as for the initial credentialing process spec ified in subparagraph (C) of this paragraph] :

(-a-) [(I) ] Licensure and information on sanctions or limitations on licensure;

(-b-) [(II) ] Board certification:

(-1-) [(-a-) ] if the physician or individual provider was due to be recertified; or

(-2-) [(-b-) ] if the physician or individual provider indicates that he or she has become board certified since the last time he or she was credentialed or recredentialed; and

(-c-) [(III) ] Drug Enforcement Agency (DEA) or Department of Public Safety (DPS) Controlled Substances Registration Certificate, if applicable. These may be reverified by any one of the following means:

(-1-) [(-a-) ] copy of the DEA or DPS certificate;

(-2-) [(-b-) ] visual inspection of the original certificate;

(-3-) < /u> [(-c-) ] confirmation with DEA or DPS;

(-4-) [(-d-) ] entry in the National Technical Information Service database; or

(-5-) [(-e-) ] entry in the American Medical Association Physician MasterFile [ Master File ].

(II) [ (ii) ] Review of updated [ Updated ] history of professional liability claims[ , and sanction and restriction information from Medicare and Medicaid ] in accordance with the verification sources and time limits specified in subparagraph (C)(iii) of this paragraph.

(E) The credentialing process for institutional providers shall include the following:

(i) Evidence of state licensure;

(ii) Evidence of Medicare certification;

(iii) Evidence of other applicable state or federal requirements, e.g., Bureau of Radiation Control certification for diagnostic imaging centers, [ Texas Mental Health and Mental Retardation ] certification for community mental health centers from the Texas Department of Mental Health and Mental Retardation or its successor agency , CLIA (Clinical Laboratory Improvement Amendments of 1988) certification for laboratories;

(iv) Evidence of accreditation by a national accrediting body, as applicable; the HMO shall determine which national accrediting bodies are appropriate for different types of institutional providers. The HMO´s written policies [ policy ] and procedures must state which national accrediting bodies it accepts;

(v) Evidence of on-site evaluation of the institutional provider against the HMO´s written standards for participation if the provider is not accredited by the national accrediting body required by the HMO.

(F) The HMO procedures shall provide for recredentialing of institutional providers at least every three years through a process that updates information obtained for initial credentialing as set forth in subparagraph (E)(i)-(iv) [ (E)(i)- (v) ] of this paragraph.

(G) (No change.)

(5) Site visits for cause.

(A) The HMO shall have procedures for detecting deficiencies subsequent to the initial site visit. When the HMO identifies new deficiencies, the HMO shall reevaluate the site and institute actions for improvement.

(B) An HMO may conduct a site visit to the office of any physician or provider at any time for cause. The HMO shall conduct the site visit to evaluate the complaint or other precipitating event , which [ shall be conducted by appropriate personnel and ] may include[ , but not be limited to, ] an evaluation of any facilities or services related [ relating ] to the complaint or event and an evaluation of medical records, equipment, space, accessibility, appointment availability, or confidentiality practices, as appropriate.

(6) Peer Review. The QI [ quality improvement ] program shall provide for a [ an effective ] peer review procedure for physicians and individual providers , as required in the Medical Practice Act, Chapters 151-164, Occupations Code. The HMO shall designate a credentialing committee that uses a peer review process to make recommendations regarding credentialing decisions .

(7) Delegation of Credentialing.

(A) If the HMO delegates credentialing functions to other entities, it shall have:

(i) a process for developing delegation criteria and for performing pre-delegation and annual audits;

(ii) a delegation agreement;

(iii) a monitoring plan; and

(iv) a procedure for termination of the delegation agreement for non-performance.

(B) If the HMO delegates credentialing functions to an entity accredited by the NCQA, the annual audit of that entity is not required for the function(s) listed in the NCQA accreditation; however, evidence of this accreditation shall be made available to the department for review.

(C) The HMO shall maintain:

(i) documentation of pre-delegation and annual audits;

(ii) executed delegation agreements;

(iii) semi-annual reports received from the delegated entities;

(iv) evidence of evaluation of the reports;

(v) current rosters or copies of signed contracts with physicians and individual providers who are affected by the delegation agreement; and

(vi) documentation of ongoing monitoring and shall make it available to the department for review.

(D) Credentialing files maintained by the other entities to which the HMO has delegated credentialing functions shall be made available to the department for examination upon request.

(E) In all cases, the HMO shall maintain the right to approve credentialing, suspension, and termination of physicians and providers.

SUBCHAPTER V. Standards for Community Mental Health Centers

§11.2101. Definitions. The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise. Community Health Maintenance Organization (CHMO)--An entity created under the authority of Section 534.101, Health and Safety Code, by one or more community centers as defined by Section 534.001, Health and Safety Code, and authorized by the Texas Department of Insurance to provide a limited health care service plan as defined in [ Article 20A.02(l),] Insurance Code §843.002(18) .

§11.2102. General Provisions.

(a) (No change.)

(b) Each CHMO shall provide coverage for work in progress and must clearly specify that the enrollee must agree to have the work completed by a participating provider in the HMO delivery network, as defined under [ Article 20A.02(w) ] Insurance Code §843.002(15) , or as otherwise arranged by the limited service HMO.

§11.2103. Requirements for Issuance of Certificate of Authority to a CHMO.

(a) Prior to obtaining a certificate of authority under Section 534.101, Health and Safety Code (concerning Health Maintenance Organizations Certificate of Authority), an applicant CHMO must comply with each requirement for the issuance of a certificate of authority imposed on a limited health care service plan under [ the ] Insurance Code Chapters [ Chapter ] 20A and 843 ; [ Chapter 11 of ] this chapter [ title (relating to Health Maintenance Organizations) ]; and applicable insurance laws and regulations of this state.

(b) A CHMO with a certificate of authority must comply with all the appropriate requirements that a limited health care service plan must comply with under [ the ] Insurance Code Chapters [ , Chapter ] 20A and 843 ; [ Chapter 11 of ] this chapter [ title ]; and applicable insurance laws and regulations of this state to maintain a certificate of authority. A CHMO shall be subject to the same statutes and rules as a limited service HMO and considered a limited service HMO for purposes of regulation and regulatory enforcement.

(c) Nothing in this subchapter precludes one or more community centers from forming a nonprofit corporation under §162.001 [ Section 5.01 ], Medical Practice Act, Chapters 151 ­ 164, Occupations Code [ (Article 4495b, Vernon's Texas Civil Statutes) ], to provide services on a risk-sharing or capitated basis as permitted under [ Article 21.52F ] Insurance Code Chapter 844 .

(d) This subchapter does not apply to an activity exempt from regulation under [ Article 20A.26(f) ] Insurance Code §§843.051, 843.053, 843.073, and 843.318 .

SUBCHAPTER W. Single Service HMOs[ , Including Dental and Vision ]

§11.2200. Definitions. The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) (No change.)

(2) CDT--The current dental terminology [ users ] manual developed and revised periodically by the ADA .

(3) ­ (5) (No change.)

(6) Insurer--An insurance company, a group hospital service corporation operating under Chapter 842 [ 20 ] of the Texas Insurance Code, a fraternal benefit society operating under Chapter 885 [ 10 ] of the Code, or a stipulated premium insurance company operating under Chapter 884 [ 22 ] of the Code.

(7) (No change.)

(8) Point-of-service plan--A plan provided through a contractual arrangement under which indemnity benefits for the cost of dental care services other than emergency care or emergency dental care are provided by an insurer in conjunction with corresponding benefits arranged or provided by an HMO that provides dental benefits and under which an enrollee may choose to obtain benefits or services under either the indemnity plan or the HMO plan in accordance with specific provisions of Insurance Code §843.112 [ , Article 20A.38 ].

(9) (No change.)

§11.2201. General Provisions.

(a) Each single service HMO shall provide uniquely described services with any corresponding copayments for each covered service and benefit and shall provide a single health care service plan as defined under Insurance Code §843.002(26) [ , Article 20A.02(y)] . Each single service HMO must comply with all requirements for a single health care service plan specified in this subchapter.

(b) Each single service HMO schedule of enrollee copayments shall specify an appropriate description of covered services and benefits and may specify recognized procedure codes or other information which is used for the purpose of maintaining a statistical reporting system, as required under §11.1606 of this title (relating to Organization of an HMO[ and Service Area ]).

(c) Each single service HMO evidence of coverage shall include a glossary of terminology [ defining the terms] , including [ but not limited to,] such terms used in the evidence of coverage required by §11.501 of this title (relating to Forms Which Must be Approved Prior to Use [ Evidence of Coverage ]). Such glossary shall be included in the information to prospective and current group contract holders and enrollees, as required under Insurance Code §843.201 [ , Article 20A.11 ].

(d) (No change.)

§11.2203. Minimum Sta ndards, Dental Care Services and Benefits.

(a) (No change.)

(b) Each single service HMO evidence of coverage providing coverage for dental care services shall provide benefits for covered dental treatment in progress and may, if clearly disclosed, require the enrollee to have such treatment completed by a participating provider in the Health Maintenance Organization Delivery Network, as defined under Insurance Code §843.002(15) [ Article 20A.02(w) ], or as otherwise arranged by the single service HMO.

(c) Each single service HMO evidence of coverage providing coverage for dental care services and benefits shall offer services for the purposes of preventing, alleviating, curing, or healing dental disease, including dental caries and periodontal [ peridontal ] disease. Such services may include an infection control (sterilization) fee. Single service HMOs providing coverage for dental care services shall offer coverage for the following primary and preventive services provided by a general dentist or hygienist, as applicable: office visit-during and after regularly scheduled hours; oral evaluations; x-rays; bitewings; p anoramic film; dental prophylaxis (adult and child); topical fluoride treatment for children; dental sealants for children; amalgam fillings (one, two, three and four or more surface, primary and permanent-including polishing); anterior resin fillings (one, two, three and four or more surface or involving incisal angle, primary and permanent-including polishing); simple oral extractions; surgical incision and drainage of abscess-intraoral soft tissue; and palliative (emergency) treatment of dental pain.

(d) Each single service HMO evidence of coverage providing coverage for dental care services and benefits may include an infection control (sterilization) fee, and may provide secondary dental care services and benefits, including[ , but not limited to, ] posterior resin restorations, one, two, three and four or more surface (to include polishing); crowns and crown recementation; composite resin crowns, anterior-primary; sedative fillings; core buildup, including any pins, and pin retention; pulp cap (direct and indirect); therapeutic pulpotomy; root canal therapy, anterior, bicuspid and molar; gingival curettage; osseous surgery; periodontal scaling and root planing; periodontal maintenance procedures; complete denture (maxillary and mandibular); partial denture (maxillary and mandibular); root removal-exposed roots; surgical removal of erupted tooth requiring elevation of mucoperiosteal flap and removal of bone and/or section of tooth; removal of impacted tooth (soft tissue and completely bony); tooth reimplantation and/or stabilization of accidentally evulsed or displaced tooth and/or alveolus; alveoplasty; occlusal guard (bruxism appliance); or orthodontia.

(e) (No change.)

§11.2204. Minimum Standards, Vision Care Services and Benefits.

(a) Each single service HMO evidence of coverage providing vision care services and benefits shall provide the following as covered primary and preventive vision services: comprehensive eye examination to include medical history; visual acuities, with correction (distance and near), without correction (distance and near); cover test at 20 feet and at 16 inches; versions; external examination of the eye lids, cornea, conjunctiva, pupillary reaction (neurological integrity) and muscle function; binocular measurements for far and near; internal eye examination (ophthalmoscopy); autorefraction/refraction (far point and near point); tonometry (reasonable attempt or equivalent testing if contraindicated); retinoscopy; biomicroscopy; intraocular pressure-glaucoma test; slit lamp examination ; and urgent care as defined in §11.2 [§11.2(46) ] of this title (relating to Definitions).

(b) A single service HMO evidence of coverage providing vision care services and benefits may provide coverage for secondary vision care services which include[ , but are not limited to, ] contact lens examination; fitting; training; follow-up visits, or eye glasses.

§11.2207. Quality Improvement Structure and Program for Single Service HMOs.

(a) A single service HMO shall develop and maintain an ongoing quality improvement (QI) program designed to objectively and systematically monitor and evaluate the quality and appropriateness of care and services and to pursue opportunities for improvement.

(b) The governing body is ultimately responsible for the QI program. The governing body shall:

(1) appoint a QI committee (QIC) that shall include practicing physicians, individual providers and at least one enrollee from throughout the HMO's service area . For purposes of this section, the enrollee appointed to the committee may not be an employee of the HMO;

(2) approve the QI program;

(3) approve an annual QI plan;

(4) meet no less than annually to receive and review reports of the QIC or group of committees and take action when appropriate; and

(5) review the annual written report on the QI program.

(c) The QIC shall evaluate the overall effectiveness of the QI program.

(1) The QIC may delegate QI activities to other committees that may, if applicable, include practicing physicians and individual providers, and enrollees from the service area.

(A) All committees shall collaborate and coordinate efforts to improve the quality, availability, and accessibility of health care services .

(B) All committees shall meet regularly and report the findings of each meeting, including any recommendations, in writing to the QIC.

(C) If the QIC delegates any QI activity to any subcommittee, then the QIC must establish a method to oversee each subcommittee.

(2) The QIC shall use multidisciplinary teams, when indicated, to accomplish QI program goals.

(d) The QI program for single service HMOs shall be continuous and comprehensive, addressing both the quality of clinical care and the quality of services. The HMO shall dedicate adequate resources, such as personnel and information systems, to the QI program.

(1) Written description. The QI program shall include a written description of the QI program that outlines program organizational structure, functional responsibilities, and meeting frequency.

(2) Work plan. The QI program shall include an annual QI work plan designed to reflect the type of services and the population served by the HMO in terms of age groups, disease categories, and special risk status, as applicable. The work plan shall include:

(A) Objective and measurable goals; planned activities to accomplish the goals; time frames for implementation; responsible individuals; and evaluation methodology.

(B) The work plan shall address each program area, including:

(i) Network adequacy, which includes availability and accessibility of care, including assessment of open/closed physician and individual provider panels;

(ii) Continuity of health care and related services, as applicable;

(iii) Clinical studies;

(iv) The adoption and use of current professionally-recognized clinical practice guidelines, or, in the absence of current professionally-recognized clinical practice guidelines for particular practice areas or conditions, those developed by the health plan that:

(I) are approved by participating physicians and individual providers;

(II) are communicated to physicians and individual provide rs; and

(III) include preventive health services.

(v) Enrollee , physician, and individual provider satisfaction;

(vi) The complaint and appeal process, complaint data, and identification and removal of communication barriers that may impede enrollees, physicians and providers from effectively making complaints against the HMO;

(vii) Preventive health care through health promotion and outreach activities:

(viii) Claims payment processes, as applicable;

(ix) Contract monitoring, including delegation oversight and compliance with filing requirements;

(x) Utilization review processes, as applicable;

(xi) Credentialing;

(xii) Member services; and;

(xiii) Pharmacy services, including drug utilization.

(3) Evaluation. The QI program shall include an annual report on the QI program, which includes completed activities, trending of clinical and service goals, analysis of program performance, and conclusions.

(4) Credentialing. An HMO shall implement a documented process for selection and retention of contracted physicians and providers, which includes the following elements, as applicable:

(A) The HMO's policies and procedures shall clearly indicate the physician or individual provider directly responsible for the credentialing program and shall include a description of his or her participation.

(B) HMOs shall develop written criteria for credentialing of physicians and providers and written procedures for verifications.

(i) The HMO shall credential all physicians and providers including advanced practice nurses and physician assistants, if they are listed in the provider directory. An HMO shall credential each physician and individual provider who is a member of a contracting group, such as an independent practice association or medical group.

(ii) Policies and procedures must include the following physicians´ and providers´ rights:

(I) the right to review information submitted to support the credentialing application;

(II) the right to correct erroneo us information;

(III) the right, upon request, to be informed of the status of the credentialing or recredentialing application; and

(IV) the right to be notified of these rights.

(iii) An HMO is not required to credential:

(I) hospital-based physicians or individual providers, including advanced practice nurses and physician assistants unless listed in the provider directory;

(II) individual providers who furnish services only under the direct supervision of a physician or another individual provider except as specified in clause (i) of this subparagraph;

(III) students, residents, or fellows;

(IV) pharmacists; or

(V) opticians.

(iv) An HMO must complete the initial credentialing process , including application, verification of information, and a site visit (if applicable), before the effective date of the initial contract with the physician or provider.

(v) Policies and procedures shall include a provision that applicants be notified of the credentialing or recredentialing decision no later than 60 calendar days after the credentialing committee´s decision.

(vi) An HMO shall have written policies and procedures for suspending or terminating affiliation with a contracting physician or provider, including an appeals process, pursuant to Insurance Code §§843.306 - 843.309.

(vii) The HMO shall have a procedure for the ongoing monitoring of physician and provider performance between periods of recredentialing and shall take appropriate action when it identifies occurrences of poor quality. Monitoring shall include:

(I) Medicare and Medicaid sanctions: the HMO must determine the publication schedule or release dates applicable to its physician and provider community; the HMO is responsible for reviewing the information within 30 calendar days of its release;

(II) Information from state licensing boards regarding sanctions or licensure limitations; and

(III) Complaints.

(viii) The HMO's procedures shall ensure that selection and retention criteria do not discriminate against physicians o r providers who serve high-risk populations or who specialize in the treatment of costly conditions. Procedures shall also include a provision that credentialing and recredentialing decisions are not based solely on an applicant´s race, ethnic/national identity, gender, age, sexual orientation, or the types of procedures or types of patients.

(ix) The HMO shall have a procedure for notifying licensing or other appropriate authorities when a physician´s or provider's affiliation is suspended or terminated due to quality of care concerns.

(C) Initial credentialing process for physicians and individual providers shall include the following:

(i) Physicians, advanced practice nurses and physician assistants shall complete the standardized credentialing application adopted in §21.3201 of this title (relating to the Texas Standardized Credentialing Application for Physicians, Advanced Practice Nurses and Physician Assistants) and individual providers shall complete an application which includes a work history covering at least five years, a statement by the applicant regarding any limitations in ability to perform the functions of the position, history of loss of license and/or fel ony convictions; and history of loss or limitation of privileges, sanctions or other disciplinary activity, lack of current illegal drug use, current professional liability insurance coverage information, and information on whether the individual provider will accept new patients from the HMO . This does not preclude an HMO from using the standardized credentialing application form specified in §21.3201 of this title for credentialing of individual providers. The completion date on the application shall be within 180 calendar days prior to the date the credentialing committee deems a physician or individual provider eligible for initial credentialing.

(ii) The HMO shall verify the following from primary sources and shall include evidence of verification in the credentialing files:

(I) A current license to practice in the State of Texas and information on sanctions or limitations on licensure. The primary source for verification shall be the state licensing agency or board for Texas, and the license and sanctions must be verified within 180 calendar days prior to the date the credentialing committee deems a physician or individual provider eligible for initial credentialing. The license must be in effect at the time of the cr edentialing decision.

(II) Education and training, including evidence of graduation from an appropriate professional school and completion of a residency or specialty training, if applicable. Primary source verification shall be sought from the appropriate schools and training facilities or the American Medical Association MasterFile. If the state licensing board, agency, or specialty board verifies education and training with the physician´s or individual provider's schools and facilities, evidence of current state licensure or board certification shall also serve as primary source verification of education and training.

(III) Board certification, if the physician or individual provider indicates that he/she is board certified on the application. The HMO may obtain primary source verification from the American Board of Medical Specialties Compendium, the American Osteopathic Association, the American Medical Association MasterFile, or from the specialty boards, and the HMO must use the most recent available source.

(IV) Valid Drug Enforcement Agency (DEA) or Department of Public Safety (DPS) Controlled Substances Registration Certificate, if applicable. These must be in effect at the time of the credentialing decision, and the HMO may verify them by any one of the following means:

(-a-) copy of the DEA or DPS certificate;

(-b-) visual inspection of the original certificate;

(-c-) confirmation with DEA or DPS;

(-d-) entry in the National Technical Information Service database; or

(-e-) entry in the American Medical Association Physician MasterFile.

(iii) The HMO shall verify within 180 calendar days prior to the date of the credentialing decision and shall include in the physician´s or individual provider's credentialing file the following:

( I) Past five-year history of profes sional liability claims that resulted in settlements or judgments paid by or on behalf of the physician or individual provider, which the HMO may obtain from the professional liability carrier or the National Practitioner Data Bank;

(II) Information on previous sanction activity by Medicare and Medicaid which the HMO may obtain from one of the following:

(-a-) National Practitioner Data Bank;

(-b-) Cumulative Sanctions Report available over the internet;

(-c-) Medicare and Medicaid Sanctions and Reinstatement Report distributed to federally contracting HMOs;

(-d-) state Medicaid agency or intermediary and the Medicare intermediary;

(-e-) Federation of S tate Medical Boards;

(-f-) Federal Employees Health Benefits Program department record published by the Office of Personnel Management, Office of the Inspector General;

(-g-) entry in the American Medical Association Physician MasterFile.

(iv) The HMO shall perform a site visit to the offices of each primary care physician or individual provider, obstetrician-gynecologist, primary care dentist, and high-volume behavioral health physician or individual provider as part of the initial credentialing process. In addition, the HMO shall have written procedures for determining high-volume behavioral health physicians and individual providers. If physicians or individual providers are part of a group practice that shares the same office, the HMO may perform one visit to the site for all physicians or individual providers in the group practice, as well as for new physicians or individual providers who subsequently join the group practice. The HMO shall make the site visit assessment available to the department for review. The HMO shall have a process to track the opening of new physician or individual pr ovider offices. The HMO shall perform a site visit of each new office site of primary care physicians and individual providers, obstetrician-gynecologists, primary care dentists, and high-volume behavioral health physicians or individual providers as they open.

(v) Site visits shall consist of an evaluation of the site's accessibility, appearance, appointment availability, and space, using standards approved by the HMO. If a physician or individual provider offers services that require certification or licensure, such as laboratory or radiology services, the physician or individual provider shall have the current certification or licensure available for review at the site visit. In addition, as a result of the site visits, the HMO shall determine whether the site conforms to the HMO's standards for record organization, documentation, and confidentiality practices. Should the site not conform to the HMO's standards, the HMO shall require a corrective action plan and perform a follow-up site visit every six months until the site complies with the standards.

(D) The HMO shall have written procedures for recredentialing physicians and individual providers at least every three years through a process that updates information obtained in initial credentialing.

(i) Recredentialing will include a current and signed attestation that must be completed within 180 days prior to the date the credentialing committee deems a physician or individual provider eligible for recredentialing with the following factors:

(I) reasons for any inability to perform the essential functions of the position, with or without accommodation;

(II) lack of current illegal drug use;

(III) history of loss or limitation of privileges or disciplinary activity;

(IV) current professional liability insurance coverage; and

(V) correctness and completeness of the application.

(ii) Recredentialing procedures must be completed within 180 days prior to t he date the credentialing committee deems a physician or individual provider eligible for recredentialing and shall include the following processes:

(I) Reverification of the following from the primary sources:

(-a-) Licensure and information on sanctions or limitations on licensure;

(-b-) Board certification:

(-1-) if the physician or individual provider was due to be recertified; or

(-2-) if the physician or individual provider indicates that he or she has become board certified since the last time he or she was credentialed or recredentialed; and

(-c_) Drug Enforcement Agency (DEA) or Department of Public Safety (DPS) Controlle d Substances Registration Certificate, if applicable. These may be reverified by any one of the following means:

(-1-) copy of the DEA or DPS certificate;

(-2-) visual inspection of the original certificate;

(-3-) confirmation with DEA or DPS;

(-4-) entry in the National Technical Information Service database; or

(-5-) entry in the American Medical Association Physician MasterFile.

(II) Review of updated history of professional liability claims, and sanction and restriction information fr om Medicare and Medicaid in accordance with the verification sources and time limits specified in subparagraph (C)(iii) of this paragraph.

(E) The credentialing process for institutional providers shall include the following:

(i) Evidence of state licensure;

(ii) Evidence of Medicare certification;

(iii) Evidence of other applicable state or federal requirements, e.g., Bureau of Radiation Control certification for diagnostic imaging centers, certification for community mental health centers from Texas Mental Health and Mental Retardation or its successor agency, CLIA (Clinical Laboratory Improvement Amendments of 1988) certification for laboratories;

(iv) Evidence of accreditation by a national accrediting body, as applicable; the HMO shall determine which national accrediting bodies are appropriate for different types of institutional providers. The HMO´s written policies and procedures must state which national accrediting bodies it accepts;

(v) Evidence of on-site evaluation of the institutional provider against the HMO´s written standards for participation if the provider is not accredited by the national accrediting body required by the HMO.

(F) The HMO´s procedures shall provide for recredentialing of institutional providers at least every three years through a process that updates information obtained for initial credentialing as set forth in subparagraph (E)(i)-(iv) of this paragraph.

(G) Under Insurance Code Article 20A.39, the standards adopted in this paragraph must comply with the standards promulgated by the National Committee for Quality Assurance (NCQA) to the extent that those standards do not conflict with other laws of the state. Therefore, if the NCQA standards change and there is a difference between the standards specified in this paragraph and the NCQA standards, the NCQA standards shall prevail to the extent that those standards do not conflict with the other laws of this state.

(5) Site Visits for Cause.

(A) The HMO shall have procedures for detecting deficiencies subsequent to the initial site visit. When the HMO identifies new deficiencies, the HMO shall reevaluate the site and institute actions for improvement.

(B) An HMO may conduct a site visit to the office of any physician or provider at any time for cause. The HMO shall conduct the site visit to evaluate the complaint or other precipitating event, which may include an evaluation of any facilities or services related to the complaint or event and an evaluation of medical records, equipment, space, accessibility, appointment availability, or confidentiality practices, as appropriate.

(6) Peer Review. The QI program shall provide for a peer review procedure for physicians and individual providers, as required in the Medical Practice Act, Chapters 151-164, Occupations Code. The HMO shall designate a credentialing committee that uses a peer review process to make recommendations regarding crede ntialing decisions.

(7) Delegation of Credentialing.

(A) If the HMO delegates credentialing functions to other entities, it shall have:

(i) a process for developing delegation criteria and for performing pre-delegation and annual audits;

(ii) a delegation agreement;

(iii) a monitoring plan; and

(iv) a procedure for termination of the delegation agreement for non-performance.

(B) If the HMO delegates credentialing functions to an entity accredited by the NCQA, the annual audit of that entity is not required for the function(s) listed in the NCQA accreditation; however, evidence of this accreditation shall be made available to the department for review.

(C) The HMO shall maintain:

(i) documentation of pre-delegation and annual audits;

(ii) executed delegation agreements;

(iii) semi-annual reports received from the delegated entities;

(iv) evidence of evaluation of the reports;

(v) current rosters or copies of signed contracts with physicians and individual providers who are affected by the delegation agreement; and

(vi) documentation of ongoing monitoring and shall make it available to the department for review.

(D) Credentialing files maintained by the other entities to which the HMO has delegated credentialing functions shall be made available to the department for examination upon request.

(E) In all cases, the HMO shall maintain the right to approve credentialing, suspension, and termination of physicians and providers.

§11.2208 Single Health Care Services Accessibility and Availability.

(a) A single health care service HMO that chooses to offer to an enrolled population a particular service shall comply with §11.1607 (a) and (e) - (j) of this title (relating to Accessibility and Availability Requirements) . Any single health care service shall be offered directly by the HMO or by contract.

(b) A sufficient number of participating single health care physicians or dentists or other individual providers with appropriate hospital or inpatient facility admitting privileges shall be available and accessible 24 hours per day, seven days per week, within the HMO´s service area, to ensure availability and accessibility of care, including inpatient admissions and care, as appropriate.

(c) A single health care service HMO offering a service requiring inpatient status for the management of a single health care condition shall provide for the appropriate inpatient facility according to the need by contracting with one or more general, or special hospitals; or home and community support services agencies for outpatient services.

SUBCHAPTER X. Provider Sponsored Organizations

§11.2303. Application for Certificate of Authority.

(a) (No change.)

(b) Prior to obtaining a certificate of authority under [ the ] Insurance Code, Chapter 20A, an applicant PSO must comply with each requirement for the issuance of a certificate of authority imposed on an HMO under [ the ] Insurance Code, Chapters [ Chapter ] 20A and 843, 28 Texas Administrative Code Chapter 11 and other applicable insurance laws and regulations of this state except where preempted by federal law.

(c) An applicant for a certificate of authority for a PSO shall complete and file with the department the application form for a health maintenance organization adopted by reference under §11.1001 of this title (relating to Required Forms[ Adopted by Reference ]) and the Financial Plan required by §11.2304 of this title (relating to Financial Plan Requirement).

§11.2311. Dissolution; Liquidation; Rehabilitation. Any dissolution, liquidation, rehabilitation, supervision or conservation of an entity licensed under this subchapter shall be handled as provided in Insurance Code Articles[, Article ] 21.28 and [ , ] 21.28-A and §§843.463 and 843.407 [ 20A.31 ].

§11.2314. Suspension or Revocation of Certificate of Authority. The commissioner, after notice and opportunity for hearing, may suspend or revoke any certificate of authority issued to a PSO, if the commissioner finds that the PSO is insolvent or that any of the conditions described in Insurance Code §843.461 [ , Article 20A.20 ] exist.

SUBCHAPTER Y. Limited Service HMOs

§11.2402. General Provisions.

(a) Each limited service HMO shall provide uniquely-described services with any corresponding copayments for each covered service and benefit and shall provide a limited health care service plan as defined under Insurance Code §843.002 [ Article 20A.02(l) ]. Each limited service HMO must comply with all requirements for a limited health care service plan specified in this subchapter.

(b) Each limited service HMO schedule of enrollee copayments shall specify a n appropriate description of covered services and benefits and may specify recognized procedure codes or other information [ which is ] used for [ the purpose of ] maintaining a statistical reporting system, as required under §11.1902 of this title (relating to Quality Improvement Program for Basic and Limited Services HMOs [ §11.1606 of this title (relating to Organization of an HMO and Service Area ]).

(c) Each limited HMO evidence of coverage shall include a glossary of terminology [ defining the terms ], including [ but not limited to, ] such terms used in the evidence of coverage required by §11.501 of this title (relating to Forms Which Must be Approved Prior to Use [ Evidence of Coverage ]). Such glossary shall be included in the information to prospective and current group contract holders and enrollees, as required under Insurance Code §843.201 [ Article 20A.11 ].

(d) (No change.)

§11.2405. Minimum Standards, Mental Health and Chemical Dependency Services and Benefits.

(a) Each limited service HMO evidence of coverage providing coverage for mental health/chemical dependency services and benefits shall cover, in accord with the limited service HMO's standards of medical necessity, court ordered mental health/chemical dependency treatment and may, if clearly disclosed, require the enrollee to have such treatment completed by a participating provider in the Health Maintenance Organization Delivery Network, as defined under Insurance Code §843.002 [ Article 20A.02(w) ], or as otherwise arranged by the limited service HMO.

(b) Each limited service HMO evidence of coverage providing coverage for mental health/chemical dependency services and benefits shall provide primary mental health/chemical dependency services and benefits, including[ , but not limited to ]:

(1) - (2) (No change.)

(3) Treatment of chemical dependency [ that shall be provided ] in accord with the levels of care and clinical criteria specified in §§3.8001, [ 28 TAC ((§3.8001 ] et seq. of this title (relating to Standards for Reasonable Cost Control and Utilization Review for Chemical Dependency Treatment Centers).

(4) (No change.)

(c) (No change.)

§11.2406. Minimum Standards, Long Term Care Services and Benefits. Each limited service HMO evidence of coverage providing long-term care services and benefits shall comply with Insurance Code Article 3.70-12 and §§3.3801, et seq. of this title (relating to Standards for Long-Term Care Insurance Coverage Under Individual and Group Policies).

SUBCHAPTER Z. Point-of-Service Riders

§11.2501. Definitions. The following words and terms, when used in this subchapter, shall have the following meaning , unless the context indicates otherwise .

(1) (No change.)

(2) Corresponding benefits--Benefits provided under a point-of-service (POS) rider or the indemnity portion of a point-of-service (POS) plan, as defined in Article [ Articles ] 3.64(a)(4) and §843.108 [ 20A.02(bb) ] of the Code, that conform to the nature and kind of coverage provided to an enrollee under the HMO portion of a point-of-service plan.

(3) ­ (13) (No change.)

§11.2502. Issuance of Point-of-service Riders. An HMO may issue a POS rider plan only if the HMO meets all of the applicable requirements set forth in this section.

(1) Solvency of HMOs Issuing Point-of-service Rider Plans.

(A) For HMOs that have been licensed for at least one calendar year, the HMO shall maintain a net worth of at least the sum of:

(i) the greater of:

(I) the minimum net worth required by the Code for that HMO; or

(II) 100% of the authorized control level of risk-based capital as set forth in §11.809 of this title (relating to Risk-Based Capital for HMOs and Insurers Filing the NAIC Health Blank ); and

(ii) (No change.)

(B) ­ (E) (No change.)

(2) ­ (5) (No change.)

§11.2503. Coverage Relating to POS Rider Plans.

(a) ­ (c) (No change.)

(d) An HMO that issues or offers to issue a POS rider plan is subject, to the same extent as the HMO is subject in issuing any other health plan product, to all applicable provisions of Chapters [ Chapter ] 20A and 843 , and Articles 21.21, 21.21A [ 21.21-A ], 21.21-1, 21.21-2, 21.21-5 and 21.21-6 of the Code.

(e) (No change.)

SUBCHAPTER AA. Delegated Entities

§11.2601. General Provisions.

(a) ­ (b) (No change.)

(c) Applicability to Group Model HMO. This subchapter does not apply to a group model HMO, as defined by [ Texas ] Insurance Code §843.111 [ 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, Chapters [ Chapter ] 20A and 843 .

(2) ­ (5) (No change.)



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