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You are here: Home . rules . 2007 . 1217-059

SUBCHAPTER H. Examinations 28 TAC §10.200

1. INTRODUCTION. The Texas Department of Insurance proposes new §10.200, concerning assessments to cover the expenses of examining workers' compensation health care networks certified pursuant to Insurance Code Chapter 1305, the Workers' Compensation Health Care Network Act. The proposed new section is necessary to implement SB 1253, 80th Legislature, Regular Session. SB 1253 amended Insurance Code §1305.251 to require a certified workers' compensation health care network (network) to pay a fee for Department examinations conducted under §§1305.251 (relating to examination of networks) or 1305.252 (relating to general standards for retrospective review) in an amount set by the Commissioner and in accordance with rules adopted by the Commissioner. Pursuant to §1305.252(c), the fee is to be paid for the expenses of an examination that are incurred by the Commissioner or under the Commissioner's authority and that are directly attributable to that examination, including the actual salaries and expenses of the examiners directly attributable to that examination.

The proposed new section is necessary to establish matters the Commissioner will consider to determine the amount of the fee to be paid by a network for the expense of an examination conducted under Insurance Code §§1305.251 or 1305.252. Additionally, the proposed new section is necessary to specify the time in which such a fee must be paid.

In accordance with §1305.252(c) of the Insurance Code, examination fees set by the Commissioner shall include the actual salary and expenses of an examiner directly attributable to the examination of the network. The fees established under this proposed new section will be in addition to, and not in lieu of, any other charge that is required by law.

Proposed §10.200(a) provides that in accordance with Insurance Code §1305.251, a network shall pay to the Department an examination fee for expenses directly attributable to an examination of the network conducted pursuant to Insurance Code §§1305.251 or 1305.252.

Proposed §10.200(b) specifies that the examination fee shall consist of the actual salary and expenses of the examiners directly attributable to the examination. Proposed §10.200(b)(1) describes how to calculate the part of an examiner's salary included in the examination fee, and proposed §10.200(b)(2) describes the expenses included in the examination fee.

Proposed §10.200(c) requires that an examination fee paid pursuant to the section shall be payable and due to the Texas Department of Insurance, P.O. Box 149104, Mail Code 108-3A, Austin, Texas 78714-9104, no later than 30 days from the invoice date.

2. FISCAL NOTE. Margaret Lazaretti, Deputy Commissioner, Health and Workers' Compensation Networks Division, has determined that for the first five-year period the proposed new section is in effect, the anticipated fiscal impact on state government is estimated income of $1,500 per examination to the Texas Department of Insurance operating account as a result of the enforcement or administration of the proposal. There will be no fiscal implications for local government as a result of enforcing or administering the section, and there will be no effect on local employment or the local economy.

3. PUBLIC BENEFIT/COST NOTE. Ms. Lazaretti also has determined that for each year of the first five years the proposed amendments are in effect, the public benefit anticipated as a result of enforcing the section will be the establishment of adequate and reasonable fees to defray the Department's expenses of examinations of workers' compensation certified networks pursuant to Insurance Code §§1305.251 or 1305.252. Ms. Lazaretti has determined that the direct economic cost to entities required to comply with the proposal will vary based on factors arising from the particulars of a specific examination, such as: the length of time an examination requires; whether there is a need to do an examination on-site; and, if an onsite examination is conducted, the physical location of the books, records, or premises that is examined.

The costs for entities required to comply with the proposal will consist of the actual salary of the examiner directly attributable to the examination and the actual expenses of the examiner directly attributable to the examination, including transportation, lodging, meals, subsistence expenses, and parking fees. The actual salary of an examiner is to be determined by dividing the annual salary of the examiner by the total number of working days in a year, then dividing that amount by the number of hours in a working day. The actual salary included in an examination fee shall be the part of the annual salary attributable to each hour the examiner examines the network.

The Department anticipates that an examination of a certified network will entail the same amount of time as an examination of a Health Maintenance Organization (HMO) that is of similar organizational size and structure. This is because similar data and information will be reviewed and similar procedures will be followed. Therefore, based upon the fees charged for the Department's examination of an HMO, it is anticipated that an average fee for an examination of a certified network will be approximately $1,500.00.

4. ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS FOR SMALL AND MICRO BUSINESSES. As required by the Government Code §2006.002(c), the Department has determined that the proposal may have an adverse economic effect on approximately five small or micro businesses that are required to comply with the proposed rules. Adverse economic impact may result from costs associated with the amount of the required examination fee resulting from this proposal. The cost of compliance will not vary between large businesses and small or micro businesses, and the Department's cost analysis and resulting estimated costs in the Public Benefit/Cost Note portion of this proposal is equally applicable to small or micro businesses. The total cost of compliance to large businesses and small or micro businesses is not dependent upon the size of the business, but rather is dependent upon the length of time an examination lasts, and whether an examination is conducted onsite (resulting in expenses associated with travel to the site).

In accordance with the Government Code §2006.002(c-1), the Department has considered other regulatory methods to accomplish the objectives of the proposal that will also minimize any adverse impact on small and micro businesses.

The primary objective of the proposal is to promulgate a fee, as required by SB 1253, for examination of certified networks conducted under §§1305.251 or 1305.252 that is sufficient to cover the Department's costs for the examination, including expenses that are directly attributable to the examination.

The other regulatory methods considered by the Department to accomplish the objectives of the proposal and to minimize any adverse impact on small and micro businesses include: (i) not adopting the proposed regulation, (ii) implementing different requirements or standards for small and micro-businesses, and (iii) performing remote examinations when possible, thereby reducing the fee charged for an examination.

Not adopting the proposed regulation. If this proposal were not adopted, certified workers' compensation networks, including small or micro businesses would not be able to comply with the statutory requirement that a certified network pay a fee, in accordance with rules adopted by the Commissioner of Insurance, for examinations conducted under §§ 1305.251 and 1305.252. Without a rule, the Department would not have the means to recover examination costs. The Department rejected this approach because it would not accomplish the objective of the statute or the rule proposal and would not be consistent with the intent of the legislature in requiring payment of the fee.

Implementing different requirements or standards for small and micro businesses. If the proposal were not made applicable to small or micro businesses or if the proposal set a smaller examination fee for small or micro businesses, the proposed amendments would not have an adverse economic effect on small or micro businesses or would have a smaller possible adverse economic effect on small or micro businesses. However, §1305.251 of the Labor Code mandates that a network pay an examination fee based on expenses that "are directly attributable to that examination." The Department rejected this approach because a reduced examination fee would not be based on the actual expenses of the examination, as required by the Insurance Code.

Performing remote examinations when possible, thereby reducing the fee charged for an examination. Insurance Code §§1305.251 and 1305.252 authorize the Department to conduct examinations either remotely or on-site. The Department anticipates that an examination fee for a remote examination would likely be lower than the examination fee for an on-site examination, because the examination fee for a remote examination would not include such expenses as transportation, lodging, meals, or parking fees. The Department has determined that this approach will achieve the purpose of the proposed rule and reduce the economic impact on small or micro businesses; therefore, the Department will exercise regulatory flexibility by conducting examinations remotely, when possible

5. TAKINGS IMPACT ASSESSMENT. The Department has determined that no private real property interests are affected by this proposal and that this proposal does not restrict or limit an owner's right to property that would otherwise exist in the absence of government action, and, therefore, does not constitute a taking or require a takings impact assessment under the Government Code §2007.043.

6. REQUEST FOR PUBLIC COMMENT. To be considered, written comments on the proposal must be submitted no later than 5:00 p.m. on January 28, 2008 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 comments should be simultaneously submitted to Margaret Lazaretti, Deputy Commissioner, Health and Workers' Compensation Networks Division, Mail Code 103-6A, 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.

7. STATUTORY AUTHORITY. The new section is proposed under the Insurance Code §§1305.251, 1305.007, and 36.001. Section 1305.251 requires a certified workers' compensation health care network to pay a fee to the Department, in an amount set by the Commissioner and in accordance with rules adopted by the Commissioner, for the expenses of an examination conducted under §1305.251 or §1305.252 that are incurred by the Commissioner or under the Commissioner's authority and are directly attributable to that examination, including the actual salaries and expenses of the examiners directly attributable to that examination, as determined under rules adopted by the Commissioner. Section 1305.007 provides that the Commissioner may adopt rules as necessary to implement Insurance Code Chapter 1305, the Workers' Compensation Health Care Networks Act. Section 36.001 provides that the Commissioner 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.

8. CROSS REFERENCE TO STATUTE. The following statutes are affected by this proposal: Insurance Code §§1305.251 and 1305.252.

9. TEXT.

Subchapter H. Examinations.

§10.200. Fee for Examination of a Certified Workers' Compensation Health Care Network.

(a) As provided in Insurance Code §1305.251, a network shall pay to the department an examination fee set by the Commissioner for expenses directly attributable to an examination of the network conducted pursuant to Insurance Code §§1305.251 or 1305.252.

(b) The examination fee shall include the actual salary and expenses of the examiners directly attributable to the examination.

(1) The actual salary of an examiner is determined by dividing the annual salary of the examiner by the total number of working days in a year, then dividing that amount by the number of hours in a working day. The actual salary included in an examination fee shall be the part of the annual salary attributable to each hour the examiner examines the network.

(2) The expenses included in an examination fee shall be those actually incurred by the examiner and directly attributable to the examination, including the actual cost of:

(A) transportation,

(B) lodging,

(C) meals,

(D) subsistence expenses,

(E) parking fees, and

(F) department overhead expense.

(c) An examination fee paid pursuant to this section shall be payable and due to the Texas Department of Insurance, P.O. Box 149104, Mail Code 108-3A, Austin, Texas 78714-9104, no later than 30 days from the invoice date.



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