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You are here: Home . rules . 2006 . 1218-059

SUBCHAPTER GG. Health Care Quality Assurance Presumed Compliance

28 TAC §§21.4101 - 21.4106

1. INTRODUCTION. The Texas Department of Insurance proposes new Subchapter GG, §§21.4101 - 21.4106, concerning health care quality assurance presumed compliance for certain entities that offer health benefit plans. These new sections are necessary to implement §1 of SB 155, enacted by the 79th Legislature, Regular Session, which added Insurance Code Chapter 847, the Health Care Quality Assurance Act (Act), effective June 17, 2005. The Insurance Code Chapter 847 applies to entities that: issue a health benefit plan, as defined in Insurance Code §847.003(2); hold a license or certificate of authority issued by the Commissioner; and provide benefits for medical or surgical expenses as a result of a health condition, accident, or sickness, including those entities listed in the Insurance Code §847.004.

The Department posted an informal draft of the new sections on its Internet website from November 20 through December 6, 2006, and invited public input. The purpose of the proposed rule and the Act is to provide standards for the appropriate recognition of accreditation by nationally recognized accreditation organizations of health benefit plan issuers. These standards will facilitate increased affordability of health benefit plan coverage for consumers and eliminate the duplication of effort by both health benefit plan issuers and state agencies. Consistent with the Act, the proposed rule outlines the conditions under which a health benefit plan issuer shall be presumed in compliance with state statutory and regulatory requirements, as provided in the Insurance Code §847.005(a), and outlines the confidentiality requirements of accreditation reports, summary results, and examination reports, as provided in the Insurance Code §847.006. Under the Act, accreditation reports are proprietary and confidential information and summary results are not proprietary information and subject to public disclosure. As authorized by the Insurance Code §847.005(e), the proposed rule prescribes the procedures and the schedule for the Department's monitoring and periodic analysis of national accreditation organization standards, as well as updates and amendments made to those standards, compared to state statutory and regulatory requirements. The Department proposes to monitor and analyze updates to national accreditation organization standards on at least an annual basis because the national accreditation organizations generally publish updates to their standards on an annual basis. As authorized by Insurance Code §847.007(c), the proposal determines the applications of compliance by delegated entities, delegated third parties, and utilization review agents by the health benefit plan issuer that contracts with delegated entities, delegated third parties, and utilization review agents. As authorized by the Insurance Code §§847.005(d) and 847.006(a), the proposal requires health benefit plan issuers to report loss of nonconditional accreditation status to the Department. Additionally, the proposed rule defines relevant terms, some of which are referenced in, but not defined by the Act. The definitions section of the proposed text includes an updated reference to the Insurance Code Article 21.58A §2(21), which is revised as §4201.002(14) effective April 1, 2007, as a result of the enactment of the nonsubstantive revision of the Insurance Code by the 79th Legislature, Regular Session, HB 2017.

Section 21.4101 states the purpose and the scope of the subchapter. Section 21.4102 defines relevant terms, including accreditation report, nonconditional accreditation, and summary results. Section 21.4103(a) sets forth the requirements by which a health benefit plan issuer shall be presumed in compliance with state statutory and regulatory requirements. Section 21.4103(b) requires that in conducting an examination of a health benefit plan issuer, the Commissioner shall accept an accreditation survey report submitted by a health benefit plan issuer as evidence of compliance with the processes and standards for which the health benefit plan issuer has received nonconditional accreditation. Section 21.4103(c) sets forth exceptions to the presumed compliance section. Section 21.4103(d) requires health benefit plan issuers seeking presumed compliance to provide to the Department a complete copy of the accreditation report. Section 21.4103(e) provides that if a health benefit plan issuer loses nonconditional accreditation status, it must report this change in status to the Department within 30 days. Section 21.4104(a) allows presumed compliance of functions that health benefit plan issuers delegate to delegated entities, delegated third parties, and utilization review agents when the health benefit plan issuer is accredited by a national accreditation organization, and §21.4104(b) allows presumed compliance of delegated functions when a health benefit plan issuer is not, but the delegated entity, delegated third party, or utilization review agent of the health benefit plan issuer is accredited by a national accreditation organization. Section 21.4105 provides that the Department shall: in subsection (a), compare national accreditation organization standards with state statutory and regulatory requirements; in subsection (b), monitor and analyze, at least annually, updates to national accreditation organization standards; in subsection (c), post a presumed compliance table on its Internet website; and in subsection (d), update the posted table of standards at least annually. Section 21.4106(a) sets forth the confidentiality requirements for accreditation reports; subsection (b) sets forth the confidentiality requirements for summary results; and subsection (c) sets forth the confidentiality requirements for examination reports.

2. FISCAL NOTE. Jennifer Ahrens, Associate Commissioner for the Life, Health, & Licensing Division, has determined that for each year of the first five years the proposed sections will be in effect, there may be some cost savings for state government as a result of the enforcement or administration of the proposal. The SB 155 Bill Analysis (Texas State Senate Affairs Committee, Bill Analysis (Enrolled), SB 155, 79th Leg., R.S. (July 18, 2005)), states that the Act will, "…help reduce costs for state agencies overseeing licensing of health care entities, without reducing quality standards" and the presumed compliance standards under the Act should relieve state agencies from at least some of the lengthy onsite examinations of health benefit plan issuers. According to the SB 155 Fiscal Note (Legislative Budget Board, Fiscal Note (Enrolled), SB 155, 79th Leg., R.S. (May 26, 2005)), this reduction in actual costs is not expected to be significant. However, the SB 155 Bill Analysis states that this change in process will ". . . allow the applicable state agencies to focus on other issues . . . ." The Department estimates that the current time it takes Department staff to examine an accredited health benefit plan issuer will be reduced by as much as half. The Department will require a health benefit plan issuer to submit their accreditation report to the Department in lieu of the Department conducting an onsite review of various plan documents. This change to the examination process will reduce travel time for relevant Department staff, which will enable those staff to devote their time to other regulatory matters.

Ms. Ahrens has also determined that there will be no fiscal impact to local government as a result of enforcing or administering the proposed sections. Additionally, the proposal will have no measurable effect on local employment or the local economy.

3. PUBLIC BENEFIT/COST NOTE. Ms. Ahrens also has determined that for each year of the first five years the proposed sections are in effect, the public benefit anticipated as a result of the proposed new sections will be elimination of the unnecessary duplication of reviews of the processes of health benefit plan issuers by state regulators and national accreditation organizations and potential cost savings to consumers through increased affordability of health benefit plan coverage for consumers. According to the SB 155 Bill Analysis (Texas State Senate Affairs Committee, Bill Analysis (Enrolled), SB 155, 79th Leg., R.S. (July 18, 2005)), preparing for review by national accreditation organizations, as well as for state agencies, can cost a health benefit plan issuer hundreds of thousands or millions of dollars. Additionally, the SB 155 Bill Analysis states: "Many of the systems and processes used by NCQA and URAC are also used by state agencies in conducting their accreditation reviews. This results in multiple and redundant reviews." Avoiding unnecessarily duplicative reviews will save health benefit plan issuers some of the substantial costs associated with preparing for reviews. It is anticipated that health benefit plan issuers will pass those costs savings on to consumers.

Ms. Ahrens has determined that any economic costs to persons or entities required to comply with the proposal results from the enactment of Insurance Code Chapter 847 and are not the result of the proposed rule. Accordingly, there is no anticipated difference between the costs of compliance for large and small or micro businesses as a result of the proposed sections. The Department has considered the purposes of the relevant statute, which is to avoid duplication of effort and facilitate cost savings by allowing for presumed compliance with certain state statutory and regulatory requirements of appropriately accredited health benefit plan issuers, and has determined that it is neither legal, feasible, nor necessary to waive or modify the requirements of the sections for small or micro businesses.

4. REQUEST FOR PUBLIC COMMENT. To be considered, written comments on the proposal must be submitted no later than 5:00 p.m. on January 29, 2006 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 to Jennifer Ahrens, Associate Commissioner, Life, Health & Licensing Division, Mail Code 107-2A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104. Any request for a public hearing should be submitted separately to the Office of the Chief Clerk before the close of the public comment period. If a hearing is held, written and oral comments presented at the hearing will be considered.

5. STATUTORY AUTHORITY. The new sections are proposed pursuant to the Insurance Code §§847.005(a), (d), and (e); 847.006(a) and (b); 847.007(a), (b), and (c); 843.006(b); 1272.001(a)(1) and (a)(3); Article 21.58A §2(21); and 36.001. Section 847.005(a) states that a health benefit plan issuer is presumed to be in compliance with state and statutory regulatory requirements if the health benefit plan issuer has received nonconditional accreditation by a national accreditation organization and the national accreditation organization's accreditation requirements are the same, substantially similar to, or more stringent than the Department's statutory or regulatory requirements; Section 847.005(d) provides that the commissioner may take appropriate action, including the imposition of sanctions under Chapter 82, against a health benefit plan issuer who is presumed under Subsection (a), (b), or (c) of §847.005 to be in compliance with state statutory and regulatory requirements but does not maintain compliance with the same, substantially similar, or more stringent requirements applicable to the health benefit plan issuer under Subsection (a), (b), or (c). Section 847.005(e) provides that the Department shall monitor and analyze periodically as prescribed by rule the Commissioner updates and amendments made to national accreditation organization standards as necessary to ensure that those standards remain the same, substantially similar to, or more stringent than the Department's statutory or regulatory requirements. Section 847.006(a) provides that the Commissioner may require a health benefit plan issuer to submit to the Commissioner the accreditation report issued by the national accreditation organization. Section 847.006(b) states that an accreditation report submitted under Subsection (a) is proprietary and confidential information under Chapter 552, Government Code, and is not subject to subpoena. Section 847.007(a) states that in conducting an examination of a health benefit plan issuer, the Commissioner shall except the accreditation report submitted by the health benefit plan issuer as prima facie demonstration of the issuer's compliance with the processes and standards for which the issuer has received nonconditional accreditation and may adopt relevant findings in a health benefit plan issuer's accreditation report if the accreditation report complies with the nondisclosure of proprietary and confidential information and personal health information. Section 847.007(b) provides that Subsection (a) does not apply to any process or standard of a health benefit plan issuer that is not covered as part of the issuer's accreditation and that this section does not set minimum quality standards but only operates as a replacement of duplicate requirements. Section 847.007(c) provides that the Commissioner may by rule determine the application of compliance with national accreditation organization requirements by a delegated entity, delegated third party, or utilization review agent to compliance by the health plan issuer that contracts with the delegated entity, delegated third party, or utilization review agent. Section 843.006(b) provides that an examination report is confidential but may be released if, in the opinion of the Commissioner, the release is in the public interest. Section 1272.001(a)(1)

defines delegated entity. Section 1272.001(a)(3) defines delegated third party. Article 21.58A §2(21) defines utilization review agent. Section 36.001 provides that the Commissioner may adopt any rules necessary and appropriate to implement the powers and duties of the Department under the Insurance Code and other laws of this state.

6. CROSS REFERENCE TO STATUTE. The following statutes are affected by this proposal: Insurance Code §§ 847.005(a), (d), and (e); 847.006(a) and (b); 847.007(a), (b), and (c); 843.006(b); 1272.001(a)(1) and (a)(3); and Article 21.58A §2(21)

7. TEXT.

§21.4101. Purpose and Scope.

( a) General purpose. This subchapter implements provisions of the Health Care Quality Assurance Act (Act), the Insurance Code Chapter 847. The general purpose of the Act and this subchapter is to provide standards for the appropriate recognition of accreditation of health benefit plan issuers by nationally recognized accreditation organizations. These standards will facilitate increased affordability of health benefit plan coverage for consumers and eliminate the duplication of effort by both health benefit plan issuers and state agencies.

( b) Applicability. This subchapter applies to an entity that:

(1) issues a health benefit plan as defined in the Insurance Code §847.003(2);

(2) holds a license or certificate of authority issued by the commissioner; and

(3) provides benefits for medical or surgical expenses as a result of a health condition, accident, or sickness, including those entities listed in the Insurance Code §847.004.

§21.4102. Definitions. The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise.

( 1) Accreditation report--The final report a national accreditation organization issues that contains a detailed analysis of the accreditation survey results including the scores of the health benefit plan issuer and the extent to which the health benefit plan issuer meets or exceeds, or fails to meet, the required accreditation standards.

(2) Delegated entity--Has the meaning assigned by the Insurance Code §1272.001(a)(1).

(3) Delegated third party--Has the meaning assigned by the Insurance Code §1272.001(a)(3).

(4) Health benefit plan--Has the meaning assigned by the Insurance Code §847.003(2).

(5) National accreditation organization--Has the meaning assigned by the Insurance Code §847.003(3).

(6) Nonconditional accreditation--Final accreditation survey results a national accreditation organization issues stating an outcome that meets or exceeds the requirements of the national accrediting organization in a particular category and that is not conditional or contingent upon the health benefit plan issuer correcting any deficiencies.

(7) Summary results--A synopsis of the final accreditation survey results, excluding numeric scores and percentages, that a national accreditation organization issues that provides the accreditation outcome results of the health benefit plan issuer, such as in report card format, but that is not a complete and detailed report of the accreditation survey results.

(8) Utilization review agent--Has the meaning assigned by the Insurance Code Article 21.58A §2(21) (§4201.002(14) effective April 1, 2007 ).

§21.4103. Presumed Compliance.

( a) Health benefit plan issuer presumed compliance. Pursuant to Insurance Code §847.005(a), a health benefit plan issuer shall be presumed to be in compliance with state statutory and regulatory requirements if:

( 1) a national accreditation organization has issued the health benefit plan issuer nonconditional accreditation applicable to its operations within the state of Texas ; and

(2) the national accreditation organization's accreditation requirements are the same, substantially similar to, or more stringent than the department's statutory and regulatory requirements.

(b) Examination. Pursuant to Insurance Code §847.007(a), in conducting an examination of a health benefit plan issuer, the commissioner:

(1) shall accept the accreditation report submitted by the health benefit plan issuer as evidence of the health benefit plan issuer's compliance with the processes and standards for which the issuer has received nonconditional accreditation; and

(2) may adopt relevant findings from a health benefit plan issuer's accreditation report in the examination report if the accreditation report complies with applicable state and federal requirements regarding the nondisclosure of proprietary and confidential information and personal health information.

(c) Exceptions. Pursuant to Insurance Code §847.007(b), this section does not:

(1) apply to any process or standard of a health benefit plan issuer that is not covered as part of the health benefit plan issuer's accreditation; or

(2) set minimum quality standards.

(d) Submission of report. Pursuant to Insurance Code §847.006(a), at the department's request, the health benefit plan issuer seeking presumed compliance pursuant to subsection (b) of this section must provide to the department a complete copy of the accreditation report issued by the national accreditation organization.

(e) Loss of accreditation. If a health benefit plan issuer loses nonconditional accreditation, the health benefit plan issuer shall report this change in accreditation status to the department not later than the 30th day of notification by the national accreditation organization notifies the health benefit plan issuer of the loss of nonconditional accreditation status. A health benefit plan issuer will be subject to immediate examination by the department if it loses its accreditation status.

§21.4104. Health Benefit Plan Issuers Contracting with Delegated Entities, Delegated Third Parties, and Utilization Review Agents.

(a) Delegations by accredited health benefit plan issuers. If an accredited health benefit plan issuer has delegated one or more functions to a delegated entity, delegated third party, or utilization review agent, those delegated functions shall be presumed in compliance with department requirements if:

(1) the delegation was in place at the time of the accreditation organization's review of the health benefit plan issuer; or

(2) the delegated entity, delegated third party, or utilization review agent has received nonconditional accreditation or certification by a national accreditation organization.

(b) Delegations by nonaccredited health benefit plan issuers. If a nonaccredited health benefit plan issuer has delegated one or more functions to a delegated entity, delegated third party, or utilization review agent those delegated functions shall be presumed in compliance with department requirements if the delegated entity, delegated third party, or utilization review agent has received nonconditional accreditation or certification by a national accreditation organization that the department recognizes, as set forth in §21.4103 of this subchapter (relating to Presumed Compliance).

§21.4105. Department Monitoring and Analysis of National Accreditation Organization Standards.

(a) Analysis of standards. The department will compare requirements for health benefit plan issuers with the standards of national accreditation organizations. The standards of national accreditation organizations that are the same, substantially similar to, or more stringent than the requirements will be identified and used to determine the presumption of compliance of health benefit plan issuers.

(b) Monitoring schedule. The department shall, at least annually, monitor and analyze updates and amendments made to accreditation standards by national accreditation organizations to ensure that those standards remain the same, substantially similar to, or more stringent than the statutory and regulatory requirements of the department.

(c) Posting of standards. The department will post a table on its Internet website that contains a summary of its comparison of national accreditation organization standards with the statutory and regulatory requirements of the department and indicates which portions of the examination process the department will presume compliance for accredited entities. The presumed compliance table listing the summary of the comparison of national accreditation standards and department statutory and regulatory requirements is available from:

(1) the Department's Internet website at: www.tdi.state.tx.us; or

(2) the Health and WC Network Certification and QA Division, Mail Code 103-6A, Texas Department of Insurance, P.O. Box 149104 , Austin, Texas 78714-9104.

(d) Updates to standards. The department will update the table of standards posted on its Internet website on at least an annual basis, as necessary, to reflect changes made to national accreditation organization standards.

§21.4106. Confidentiality .

( a) Accreditation reports. Pursuant to Insurance Code §847.006(b), accreditation reports submitted to the department are proprietary and confidential under the Government Code Chapter 552 and are not subject to subpoena.

( b) Summary results. Pursuant to Insurance Code §847.006(c) the summary results of a national accreditation organization are not proprietary information and are subject to public disclosure under the Government Code Chapter 552.

(c) Examination reports. Pursuant to the Insurance Code §843.006(b), examination reports are confidential, but may be released if, in the opinion of the commissioner, the release is in the public interest. In accordance with the Insurance Code §847.006(b), if the commissioner releases an examination report, any confidential information from the accreditation report will be redacted before release.



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