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You are here: Home . rules . 2006 . 0208-059

EXEMPT FILING NOTIFICATION PURSUANT TO THE INSURANCE CODE, CHAPTER 5, SUBCHAPTER L, ARTICLE 5.96

The Commissioner of Insurance will consider amendments proposed by the staff of the WC Classifications, Premium Calculation and Research Division of the Property and Casualty Insurance program at the Texas Department of Insurance to the Texas Basic Manual of Rules, Classifications and Experience Rating Plan for Workers' Compensation and Employers' Liability Insurance (the Manual). The 79th Texas Legislature enacted House Bill 7 which, in pertinent part, authorizes the establishment of workers' compensation health care networks for the provision of workers' compensation medical benefits; and provides the statutory framework for the establishment of standards for the certification, administration, evaluation, and enforcement of the delivery of health care services to injured employees by workers' compensation health care networks. The purpose of these proposed amendments to the Manual is to set forth the rules and provide the endorsement to be used for policyholders who elect to provide workers' compensation health care services to injured employees through a certified workers' compensation health care network.

Staff's petition (Ref. No.W-0206-01-I) was filed on February 8, 2006.

A public hearing on this matter will not be held unless a separate request for a hearing is submitted to the Office of the Chief Clerk during the comment period as defined herein.

The proposed amendments to the Manual are filed pursuant to Texas Insurance Code Articles 5.56 and 5.96. Article 5.56 requires the Commissioner of Insurance to prescribe standard policy forms to be used by all companies writing workers' compensation insurance in Texas. Article 5.96 authorizes the Commissioner to prescribe, promulgate, adopt, approve, amend or repeal standard and uniform manual rules, rating plans, classification plans, statistical plans and policy and endorsement forms for workers' compensation insurance.

The staff has proposed amendments to the Manual as follows:

1. Amend Rule VI, relating to Rates and Premium Determination, by adding a new Section K, to be entitled "Certified Workers' Compensation Health Care Network." The new section states that the department anticipates that certified workers' compensation health care networks will help reduce the cost of workers' compensation claims in Texas and that cost savings, both anticipated and actual, should be passed on to policyholders participating in the networks in the form of a premium credit. The amount of the premium reduction, if applicable, is shown on the Information Page of the policy and is determined by applying the network credit factor to the estimated modified/schedule rating premium. The premium reduction could be prorated based on when during the policy period the policyholder makes the election to participate or makes the election to terminate participation in a certified network. The premium reduction could be forfeited if the carrier determines that the policyholder failed to provide employees notice of network requirements that are mandated in new subsection K(2)(a) or the employee acknowledgement form referenced in new subsection K(2)(b) of the rule. Before a policyholder's premium reduction can be forfeited by the insurance carrier, a letter giving 30 days notice of possible premium reduction forfeiture must be sent by the insurance carrier to the policyholder explaining why the premium credit is being forfeited. If the policyholder corrects the reason(s) for the potential forfeiture of the premium credit within the 30 days, the premium reduction will not be forfeited.

2. Amend Appendix A, relating to Procedures. Specifically, the staff proposes to amend subsection A(6), relating to Policy Issuance, by adding to the list of items that must be included on the Information Page of the policy, the network credit factor, if any is applicable. This amendment will necessitate a re-ordering and re-numbering of the items listed in subsection A (6).

3. Require a new endorsement, entitled the "Texas Health Care Network Endorsement WC 42 04 08," to be attached to all workers' compensation policies when the policyholder elects to provide workers' compensation health care services to injured employees through a certified workers' compensation health care network. The language of the proposed endorsement advises the policyholder that there may be a premium reduction because of the policyholder's election to provide workers' compensation health care services to injured employees through a certified workers' compensation health care network, and explains the information that the carrier would provide to policyholders pursuant to new Section K of Rule VI.

The staff requests that the proposed amendments to the Texas Basic Manual of Rules, Classifications and Experience Rating Plan for Workers' Compensation and Employers' Liability Insurance as proposed herein be adopted effective 15 days after notice of adoption is published in the Texas Register.

The Commissioner has jurisdiction over this matter pursuant to the Insurance Code, Articles 5.56 and 5.96.

A copy of the full text of the proposed amendments is available for review in the Office of the Chief Clerk of the Texas Department of Insurance, 333 Guadalupe Street, Austin, Texas 78714-9104. For further information or to request copies of the amendments, please contact Ms. Sylvia Gutierrez at (512) 363-6327 (refer to Ref. No. W-0206-01-I).

Written comments to these proposed amendments may be submitted no later than 5:00 p.m. on March 20, 2006 to Gene Jarmon, General Counsel and Chief Clerk, Texas Department of Insurance, P. O. Box 149104, MC 113-2A, Austin, Texas 78714-9104. An additional copy of the comments must be submitted to Nancy Moore, Deputy Commissioner, WC Classification, Premium Calculation and Research, Texas Department of Insurance, P. O. Box 149104, MC 105-2A, Austin, Texas 78714-9104.

This notification is made pursuant to the Insurance Code, Article 5.96, which exempts it from the requirements of the Government Code, Chapter 2001 (Administrative Procedure Act).



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