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You are here: Home . rules . 2008 . 0829-059

SUBCHAPTER B. MEDICARE ADVANTAGE PLANS, MEDICARE ADVANTAGE PRESCRIPTION DRUG PLANS, AND MEDICARE PART D PLANS

28 TAC §§19.101 - 19.103

1. INTRODUCTION. The Texas Department of Insurance proposes new Subchapter B, §§19.101 - 19.103, establishing qualifying license types for persons marketing Medicare Advantage Plans, Medicare Advantage Prescription Drug Plans, and Prescription Drug Plans (Medicare plans) under federal marketing guidelines specified in "Medicare Marketing Guidelines for: Medicare Advantage Plans (MAs), Medicare Advantage Prescription Drug Plans (MA-PDs), Prescription Drug Plans (PDPs) and 1876 Cost Plans," second revision, July 25, 2006, published by the Centers for Medicare and Medicaid Services (CMS guidelines), and establishing a requirement for reporting persons in violation of this subchapter. The Centers for Medicare and Medicaid Services (CMS) has published in the May 16, 2008, issue of the Federal Register proposed amendments to the July 25, 2006, CMS guidelines. Those amendments, if adopted, would be consistent with the existing CMS guidelines as described herein and this proposal. Additionally, on July 15, 2008, Congress adopted the Medicare Improvements for Patients and Providers Act of 2008, Public Law 110 - 275 (MIPPA). Among other matters, MIPPA section 103(d) requires Medicare Advantage organizations to use state-licensed insurance agents to sell Medicare Plans and to comply with state laws regulating agent appointment and termination reporting requirements. The Commissioner adopted on an emergency basis §§19.101 - 19.104, effective November 9, 2007, and published in the November 23, 2007 issue of the Texas Register (32 TexReg 8389) (Emergency Rule). Those sections expired by operation of law on May 6, 2008, and will be replaced by this proposal.

This proposal is necessary to maintain effective regulation of the insurance industry by safeguarding Texas' senior citizens and other individuals eligible for Medicare plans (Medicare beneficiaries) who are confronting significant healthcare decisions. CMS Guidelines and now MIPPA §103(d)(1), which amends §1851(h) of the Social Security Act (42 U.S.C. 1395w-21(h), require that Medicare Advantage organizations only use agents who have been licensed under state law to sell Medicare plans.

This proposal uses the term market rather than sell with respect to licensed agents because marketing is used in the CMS Marketing guidelines and fully encompasses the concept of soliciting, which is a primary function of an agent under the Insurance Code §4001.051(b). Thus, to the extent that federal law and CMS guidelines require that a Medicare Advantage organization utilize a state-licensed agent to market or sell a Medicare plan, this proposal designates that the general life, accident, and health insurance agent and general property and casualty insurance agent license types are the only Texas license types eligible to comply with that federal requirement. A licensed agent not holding a general life, accident, and health insurance agent or general property and casualty insurance agent license as required in this proposal would not be authorized to market a Medicare plan unless federal law and CMS guidelines authorize an unlicensed person to engage in that specific marketing activity.

The Department has continued to receive reports that Medicare beneficiaries of this state are being fraudulently and dishonestly deceived by licensed insurance agents into enrolling in Medicare plans that are unsuitable for those Medicare beneficiaries due to either other insurance or existing medical treatment concerns. Enrollment in an unsuitable plan often places Medicare beneficiaries at severe medical risk when they are no longer able to obtain continuing medical care from their existing physicians and care facilities and financial risk when the costs of the replacement plans exceed those of their existing insurance and other suitable available coverage. Even if care is available, the fact that it is only available from an unfamiliar and/or limited source may result in Medicare beneficiaries, to their detriment, not seeking or receiving the care to which they are justly entitled and possible irreversible physical decline or death.

Prior to the adoption of the Emergency Rule, the Department received reports that temporary agents in particular were engaging in the fraudulent and dishonest marketing activities. Pursuant to §§4001.152 - 4001.154 of the Insurance Code, temporary agents must be issued a license immediately upon receipt of the license application and further, even without receiving a license, temporary agents may begin acting as an agent eight days after the application was delivered or mailed to the Department. Temporary agents are appointed by insurers, health maintenance organizations, or other insurance agents. Temporary agents are not required to pass the Department's qualifying licensing examination demonstrating knowledge of the products they will be selling, or to have completed the Department's criminal history background check. The Department uses fingerprint-based criminal history background checks through the Texas Department of Public Safety (DPS) and the Federal Bureau of Investigation (FBI). These checks take approximately one business week to complete if the fingerprint record is submitted electronically and a month or more to complete if the fingerprint record is submitted using paper cards. Electronic submissions are available to individuals through the Department's examination vendor; however, electronic submissions are not required. Based on the statutory issuance requirements, either criminal history background check method leaves open a potential period for a temporary agent to begin marketing Medicare plans before the background check can be completed and the temporary licensee ordered to cease and desist or the license is revoked. Pursuant to the Insurance Code §4001.155, a temporary license is valid for 90 days after issuance. Pursuant to §4001.156 of the Insurance Code, a temporary license may not be issued to or renewed by the same individual more than once in a consecutive six-month period. Therefore, the individuals who obtain temporary licenses are able to market Medicare plans for an entire open enrollment period without meeting all of the requisites for individual insurance agents who are licensed pursuant to §§4001.105, 4001.106, 4056.052, 4056.053, or 4056.054 of the Insurance Code. In this proposal, the term temporary license is used to refer to a license issued under §§4001.152 - 4001.154 of the Insurance Code. The term permanent license is used to refer to a license issued to a individual satisfying the qualifications required for Texas resident insurance agents licensed under the Insurance Code §4001.105 and §4001.106, and nonresident insurance agents licensed under the Insurance Code §§4056.052, 4056.053, and 4056.054.

The emergency rule was adopted prior to the 2008 plan year annual enrollment period for Medicare plans, which was November 15, 2007, through December 31, 2007. That enrollment period has expired; however, individuals continue to qualify for Medicare plans throughout the year, and subsequent annual enrollment periods will continue in this and future years. The brief recurring annual open enrollment period presents an opportunity for individuals that would not otherwise be able to qualify for a permanent agent license to obtain access to a significant portion of this market with a temporary license. This short period, in which millions of senior citizens and other Medicare beneficiaries will again be seeking to purchase essential coverage, will allow an untrained, unqualified, or unscrupulous insurance agent to take advantage of tens or hundreds of individuals who themselves are under substantial time pressure to make complex and important healthcare choices. The open enrollment period situation is unlike normal marketing environments in which insurance agents must locate and solicit potential consumers and where those consumers have more time to consider and make informed decisions on such important health coverage matters. However, simply because the number of Medicare beneficiaries seeking coverage at other times throughout the year are fewer, the harm that can be inflicted by an untrained, unqualified, or unscrupulous insurance agent on a Medicare beneficiary seeking to enroll in a Medicare plan is still just as great and Medicare beneficiaries remain subject to fraudulent and dishonest marketing activities. Further, an emergency rule expires by operation of law and cannot under the law be re-adopted as an emergency rule even to address the serious situation that is presented by the annual open enrollment period for Medicare plans. Therefore, a permanent solution is necessary to prevent the reoccurrence of complaints resulting from the activities of temporary agents.

This proposal is necessary to address, in a comprehensive manner, the problems demonstrated by the reports of fraud and abuse resulting from untrained, unqualified, and unscrupulous temporary insurance agents actively marketing Medicare plans to unsuspecting Medicare beneficiaries. Each of these proposals are appropriate and necessary preventive measures to protect Texas' senior citizens and other Medicare beneficiaries by enhancing the Department's ability to regulate insurance agents engaging in these activities and the insurers, heath maintenance organizations and permanent agents that appoint temporary agents. Additionally, the proposal will require insurers, health maintenance organizations, and agents to report violations of this subchapter. Each of these proposals will work in conjunction with the Department's enforcement authority to help prevent the harm that untrained, unqualified, and unscrupulous temporary agents may try to inflict upon Texas' senior citizens and other Medicare beneficiaries by providing an additional means to address the problem.

Proposed §19.102 will limit the marketing of Medicare plans in this state to insurance agents holding permanent general life, accident and health insurance agent licenses and general property and casualty insurance agent licenses who are appointed by a property and casualty insurer authorized to write Medicare plans in this state. This limitation is based on the Commissioner's authority under the Insurance Code §4051.051(3) and §4054.051(9) to determine which classification of licensed insurance agent is authorized to write any other kind of insurance for the protection of the insurance consumers of this state. Federal law and CMS guidelines clearly recognize that Medicare plans are federal benefits and contemplate that state law may define a particular license type as being suitable to sell Medicare plans. The CMS guidelines provide: "It is of paramount importance to CMS that a beneficiary enrolls in a plan that the beneficiary chooses based on the beneficiary's needs." (CMS guidelines, page 129). Further, CMS guidelines provide: "An organization must utilize only a state licensed, certified, or registered individual to perform marketing, if a state has such a marketing requirement." (CMS guidelines, page 130). Based on the Commissioner's authority under the Insurance Code §4051.051(3) and §4054.051(9) this proposal continues the Commissioner's earlier determination limiting the marketing of Medicare plans in this state to insurance agents holding permanent general life, accident and health insurance agent licenses and, as appropriate, general property and casualty insurance agent licenses for the protection of the insurance consumers of this state. The determination in this proposal does not extend the authority to market Medicare plans to personal lines property and casualty insurance agents acting in compliance with the Insurance Code §4051.402(b).

Proposed §19.102 also will prohibit insurers, health maintenance organizations, or insurance agents from allowing agents that do not hold permanent general life, accident and health insurance agent licenses or general property and casualty insurance agent licenses who are acting for a property and casualty insurer engaged in selling Medicare plans or unlicensed persons to assist in the enrollment of individuals in Medicare plans unless that activity is specifically authorized under Medicare plans under the CMS Guidelines to be performed by unlicensed persons.

Proposed §19.102 does not limit the authority of insurers, health maintenance organizations, or agents, including temporary agents, to market or sell insurance products authorized under the Insurance Code, nor does it limit the authority of insurers, health maintenance organizations, or agents to appoint agents, including temporary agents, to market or sell insurance products authorized under the Insurance Code.

Proposed §19.103 requires an insurer, health maintenance organization, or an agent to report in writing any violation of these prohibitions within four calendar days of discovering the violation to the Enforcement Division of the Department. Provisions from the Emergency Rule §19.102(a) - (c) related to the appointment and use of temporary agents have been incorporated in to the more comprehensive requirements in proposed §19.102.

The Emergency Rule also included §19.104 that set forth a requirement that Medicare Advantage organizations and their subcontractors comply with certain existing Insurance Code agent appointment and termination provisions based on CMS Guidelines. While these provisions would remain effective under the CMS Guidelines and the proposed new CMS guidelines, Congress subsequently on July 15, 2008, adopted MIPPA. MIPPA section 103(d) amends the Social Security Act (42 U.S.C. 1395w-21(h)) to set forth the requirement that Medicare Advantage organizations must comply with appointment and termination provisions under state law. Thus, the requirement contained in Emergency Rule §19.104 is no longer necessary and not a part of this proposal because MIPPA now requires Medicare Advantage organizations to comply with agent appointment and termination provisions in the Insurance Code §§4001.201 - 4001.206.

The Department has determined that this proposal will not significantly diminish the available number of insurance agents that are authorized to market Medicare plans. As of July 24, 2008, 168,849 individuals held permanent general life, accident, and health insurance agent licenses, while only 625 individuals held temporary general life, accident, and health insurance agent licenses. Further, between January 1, 2008 and July 24, 2008, the Department had issued a total of 1,566 temporary general life, accident, and health insurance agent licenses at the request of 46 sponsors. From this group, 813 licensing examinations were taken (applicants may take the examination more than once), of which only 359 licensing examinations (approximately 23 percent) were passed. Thus while some temporary agents do succeed in demonstrating their qualifications, even a small number of untrained, unqualified, and unscrupulous insurance agents can take advantage of tens or hundreds of Medicare beneficiaries who rely on these insurance agents to provide them with health coverage that is appropriate for their circumstances.

Based on the foregoing facts, the Department has determined that Medicare beneficiaries faced with the vitally important healthcare choice of choosing a suitable Medicare plan or choosing other coverage are in imminent peril from unqualified and unscrupulous persons engaging in fraudulent marketing of Medicare plans. Additionally, there is imminent peril to the health and welfare of these Medicare beneficiaries. A Medicare beneficiary's unsuitable choice may result in the Medicare beneficiary no longer being able to obtain care from a known physician or provider, confusion as to where and how to seek care, and potentially physical illness or death. Therefore, this proposal is necessary to ensure that Texas Medicare beneficiaries faced with significant and complex healthcare choices are provided with proper and informed guidance from insurance agents holding permanent licenses who have demonstrated their knowledge concerning health insurance coverage and not from untrained, unqualified and potentially unscrupulous individuals engaging in fraudulent marketing of Medicare plans.

Section-by-Section Overview. The following is a section-by-section overview of the proposal.

The proposed subchapter title accurately reflects the subject matter of the subchapter, which relates to Medicare Advantage Plans, Medicare Advantage Prescription Drug Plans, and Prescription Drug Plans.

Proposed §19.101 defines the terms in the proposed subchapter.

Proposed §19.102(a) authorizes permanently licensed general life, accident, and health insurance agents to market Medicare plans. Proposed §19.102(b), consistent with the Insurance Code §4051.053, qualifies permanently licensed general property and casualty insurance agents to market Medicare plans, only to the extent that the Medicare plans are offered by a property and casualty insurer authorized to sell those products in this state. Proposed §19.102(c) provides that no agent holding any other license type is authorized to market Medicare plans, including individuals holding a temporary general life, accident, and health insurance agent license or a temporary property and casualty insurance agent license. Proposed §19.102(d) prohibits an insurer, health maintenance organization, or insurance agent from assisting or participating in enrolling any individual in a Medicare plan contract that has been marketed by an agent that does not hold a permanent general life, accident and health insurance agent license, or a general property and casualty insurance agent license who is acting for a property and casualty insurer engaged in selling Medicare plans, or unlicensed persons, unless that activity is specifically authorized under federal law and CMS Guidelines to be performed by unlicensed persons.

Finally, proposed §19.103 requires an insurer, health maintenance organization, or insurance agent to report in writing any violation of proposed §19.102 to the Department within four days of discovering the violation.

2. FISCAL NOTE. Matt Ray, Deputy Commissioner, Licensing Division, has determined that for each year of the first five years the proposal will be in effect, there will be no measurable fiscal impact to state or local governments as a result of the enforcement or administration of the proposal. There will be no measurable effect on local employment or the local economy as a result of the proposal.

3. PUBLIC BENEFIT/COST NOTE. Mr. Ray also has determined that for each year of the first five years the proposal is in effect, the anticipated public benefit will be protection of the health and welfare of the senior citizens and other Medicare beneficiaries of this state by preventing the fraud and abuse that has been observed in the Texas market regarding Medicare plans. The Department has also determined that the potential costs of compliance with the rule are nominal and limited to the violation-reporting requirement under proposed §19.103. Further, the Department has determined that the public benefits anticipated by the proposed sections outweigh the nominal costs to persons engaged in the marketing of Medicare plans in the state of Texas.

This proposal does not prevent or limit the ability of any Medicare beneficiary from obtaining coverage under a Medicare plan. Further, restricting approximately 625 individual temporary license holders will not significantly diminish the available number of insurance agents that are authorized to market Medicare plans, because there are more than 168,849 individuals licensed as of July 24, 2008, as general life, accident, and health insurance agents. Thus, the proposal will not limit or restrict the number of Medicare plan contracts that may be marketed through licensed agents.

The Department's analysis of the potential costs of compliance with the proposed sections is based on the following factors.

Proposed §19.102

Proposed §19.102(a) and (b) designates that Medicare plans may only be marketed through permanently licensed general life, accident, and health insurance agents and permanently licensed general property and casualty insurance agents, to the extent that the Medicare plans are being offered by a property and casualty insurer authorized to sell those products in this state. This proposed section does not place additional licensing requirements on or otherwise affect any individual that is currently permanently licensed as a general life, accident, and health insurance agent or as appropriate, a general property and casualty insurance agent. Such agents may continue to market Medicare plans or be appointed to market Medicare plans under this proposed section. Additionally, this section does not place any additional requirements on an individual or entity seeking to obtain a permanent general life, accident, and health insurance agent license or general property and casualty insurance agent license.

In designating those license types authorized to market Medicare plans under the Insurance Code §4051.051(3) and §4054.051(9) as necessary under federal law and CMS guidelines, proposed §19.102 does not limit the authority of any other agent license type to market any insurance product authorized for that license type under the Insurance Code. Medicare plans are federal benefits. The proposed §19.102 prohibition against insurers, health maintenance organizations, and agents from allowing agents holding other license types or unlicensed persons from assisting or participating in marketing Medicare plans, unless federal law and CMS guidelines authorize that an unlicensed person may perform the activity, is also consistent with the federal law and the CMS Guidelines' requirements that certain marketing activities must be done by licensed agents and with the Commissioner's authority under the Insurance Code to determine which license types are authorized to market Medicare plans. This prohibition does not affect any insurer, health maintenance organization, or agent's authority to market insurance products under the Insurance Code.

The Department has also determined that there will be no additional costs to insurers, health maintenance organizations, or agents that may market Medicare plans and are required to comply with this proposed section. First, the Department has determined that the proposed amendment will not significantly diminish the available number of insurance agents that are currently authorized to market Medicare plans. Thus, agent employment costs should not be affected by a shortage of trained and available agents. Further, the payment of commissions, salaries, and/or other employment or contract benefits are a business decision of the insurer, health maintenance organization, or agent and are not costs required by this proposal. Additionally, for those insurers, health maintenance organizations, or agents that choose to hire "new permanent agents" to market Medicare plans, the manner and cost of educating and training such individuals is a business decision of the insurer, health maintenance organization, or agent. Proposed §19.102 does not create any additional requirement or affect the manner by which an insurer, health maintenance organization, or agent may choose to train and educate its personnel to become licensed and any costs associated with such training is not a result of the proposed section. This proposal does not affect nor assign any cost to any training requirements associated with the marketing of Medicare plans because such plans are federal benefit plans and thus would not be a proper subject for the training of temporary agents under the Insurance Code §4001.160. Medicare plan training requirements are set pursuant to federal law and the CMS marketing guidelines; are applicable to both permanent and temporary agents; and are unaffected by this proposal. Finally, federal law and CMS marketing guidelines establishing requirements as to when and how an unlicensed person may participate in the marketing of Medicare plans are not affected by this proposal, thus any costs associated with such requirements is not a result of this proposal.

Proposed §§19.103

Proposed §§19.103(d) requires an insurer, health maintenance organization, or agent to report in writing any violation of proposed §19.103 to the Department within four days of discovering the violation. The requirement is to send the notice by United States mail or by other means acceptable to the Department. Other means may involve electronic methods that may or may not be readily available to all persons. As the mail procedure is available to any person required to comply with this proposal, the Department will consider the costs associated with submitting notice of the violation by mail. The Department estimates that the probable cost to comply with this reporting requirement by mail should be less than $5 per report. The estimated cost is based on the Department's estimate that a member of an insurer, health maintenance organization, or agent's office or administrative staff could compile and submit the required report in less than one quarter of an hour, at the mean salary rate of $16.65 per hour, as set forth in the May 2006 State Occupational Employment and Wage Estimates for Texas published by the U.S. Department of Labor at http://www.bls.gov/oes/current/oes_tx.htm. The remainder of the estimated cost is for paper, an envelope, and first class postage necessary to list the suspected violators and mail that list to the Department.

Any other costs incurred in order to comply with the proposed sections result from existing legislation and are not a result of the adoption, enforcement, or administration of the proposal.

4. ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS FOR SMALL AND MICRO BUSINESSES. The Government Code §2006.002(c) requires that if a proposed rule may have an economic impact on small businesses, state agencies must prepare as part of the rulemaking process an economic impact statement that assesses the potential impact of the proposed rule on small businesses and a regulatory flexibility analysis that considers alternative methods of achieving the purpose of the rule. The Government Code §2006.001(a)(2) defines "small business " as a legal entity, including a corporation, partnership, or sole proprietorship, that is formed for the purpose of making a profit, is independently owned and operated, and has fewer than 100 employees or less than $6 million in annual gross receipts. The Government Code §2006.001(a)(1) defines "micro business" similarly to "small business" but specifies that such a business may not have more than 20 employees. The Government Code §2006.001(a)(1) does not specify a maximum level of gross receipts for a "micro business."

§19.102. The Department has determined in the Public Benefit/Cost Note (Cost Note) portion of this proposal that proposed §19.102 does not create any additional cost for persons holding or seeking a permanent general life, accident, and health insurance agent license, or as appropriate a general property and casualty insurance agent license. The proposed section also should not create a shortage of available agents to market Medicare plans for reasons stated in the Cost Note. In addition, §19.102 does not limit the authority of any other license type to sell insurance products under any respective license type. Further, the proposed section does not create any additional requirements or costs for insurers, health maintenance organizations, or agents to market insurance products under the Insurance Code. Rather proposed §19.102 would determine under the Insurance Code §4051.051(3) and §4054.051(9), the agent license types that are authorized to sell Medicare plans, which are federal benefits. MIPPA and the CMS guidelines require Medicare plans to be marketed and sold through state-licensed insurance agents. Therefore, proposed §19.102 does not create an adverse economic impact on licensed agents because it does not create any additional costs for persons holding or seeking a general life, accident, and health insurance agent license or a general property and casualty insurance agent license; does not limit the availability of agents; and does not create costs for nor does it limit the authority of any other license type to sell products under the Insurance Code.

§19.103. The Department has determined that fewer than 20 persons may be affected by the proposed §19.103 requirement that insurers, health maintenance organizations, and agents report the use of temporary agents to market Medicare plans to the Department. This number is based on the number of temporary agent violation complaints received following the adoption of the Emergency Rule. As this type of activity is most likely to be discovered by a licensed agent who is also engaged in the marketing of Medicare plans, the Department estimates that each of the 20 persons will either qualify as a small or micro business under the Government Code §2006(a)(1) and (2) by virtue of being either a sole proprietorship or otherwise being associated with an insurance carrier, health maintenance organization, or insurance agency with less than 100 employees. The Department's cost analysis for the violation reporting requirement and resulting estimated costs on a per report basis in the Cost Note portion of this proposal, however, applies equally to all types of businesses.

Other Regulatory Methods

In accordance with the Government Code §2006.002(c-1), the Department has considered other regulatory methods to accomplish the objectives of this proposal that will also minimize any adverse impact resulting from proposed §19.103 on the persons affected by this proposal that qualify as small or micro businesses under the Government Code §2006(a)(1) and (2).

The regulatory objective of proposed §19.103 is to protect the health, safety, and economic welfare of Texas' senior citizens and other Medicare beneficiaries by establishing a violation-reporting requirement for insurers, health maintenance organizations, and agents. Other possible regulatory methods include with respect to proposed §19.103: (i) not adopting or limiting the proposed regulation; and (ii) allowing other alternative methods of delivering the notice.

Not adopting or limiting proposed §19.103. If §19.103 was not adopted, the Department would continue to receive information from agents and others related to violations. However, the reporting requirement, as well as the requirement that the notice be given in four days, places an emphasis on the serious nature which the Department considers this matter to be and, further, prompt notification to the Department is necessary to prevent Medicare beneficiaries from being abused by fraudulent and dishonest practices of unscrupulous agents. Additionally, the Department considered not requiring small and micro businesses to submit the notice. However, agents are the most likely persons to initially discover such violations, and agents are most likely going to either be, or be associated with a small or micro business. Thus, limiting the scope of the requirement would again hinder the ability of the Department to promptly respond to violations. The Department therefore rejected these approaches because this is a serious matter that must be promptly identified when it occurs so that effective and timely regulatory action can be initiated.

Allowing alternative methods of delivery. The Department anticipates that costs resulting from the proposed requirement in §19.103 are attributable to preparing and delivering the notice. The Department analyzed the cost of mailing a report to the Department in the Cost Note because that option is available to substantially everyone in the state. The Department does, however, believe that the preparation and mailing cost may be reduced or eliminated through alternative methods of delivering the notice. Thus, proposed §19.103 provides that the notice may be made by alternative methods acceptable to the Department. These methods, including electronic notices, are not expressly stated in the proposal so as to allow for regulatory flexibility. These methods may be posted on the Department's website in the future and these methods of notice delivery will be potentially available to all persons. It is possible, however, that a person required to comply with the notice would not be able to comply with an electronic notice method either due to location or lack of necessary equipment or software. Thus an electronic method of delivery was not required. Therefore, the Department has included the ability to utilize alternative delivery methods in the proposal, but is continuing to list mail as the default means of notice because it should be available to any person required to comply with proposed §19.103 and the cost is nominal.

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 Monday, October 13, 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 comment must be simultaneously submitted to Matt Ray, Deputy Commissioner for the Licensing Division, Mail Code 107-1A, 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 sections are proposed under the Insurance Code §§4001.003, 4001.005, 4001.105, 4001.106, 4001.152, 4001.153, 4001.154, 4001.155, 4001.156, 4051.051, 4051.053, 4054.051, 4056.052, 4056.053, 4056.054, and 36.001. Section 4001.003(8) provides a definition of person for use in the Insurance Code Title 13, which concerns insurance agent licensing. Section 4001.005 authorizes the Commissioner to adopt rules necessary to implement the Insurance Code Title 13 and to meet the minimum requirements of federal law, including regulations. Section 4001.105 enumerates the requirements that must be met in order for the Department to issue an insurance agent license to an individual. Section 4001.106 enumerates the requirements that must be met in order for the Department to issue an insurance agent license to a corporation or partnership. Section §4001.152 states that an applicant is not required to pass a written examination to obtain a temporary agent license. Section 4001.153 enumerates the requirements that must be met in order for the Department to issue a temporary insurance agent license to an applicant. Section 4001.154 provides authority for an applicant to begin to act as a temporary insurance agent if a temporary license is not received from the Department before the eighth day after the date the application, nonrefundable fee, and certificate are delivered or mailed to the Department and the appropriate agent, insurer, or health maintenance organization has not been notified that the application is denied. Section 4001.155 provides that a temporary insurance agent license is valid for a period of 90 days after the date of issuance. Section 4001.156 provides that a temporary insurance agent license may not be issued to or renewed by the same person more than once in a consecutive six-month period and that a temporary insurance agent license may not be issued to a person who does not intend to apply for a license to sell insurance or memberships to the general public. Section 4051.051(3) mandates that a person hold a general property and casualty license if the person acts as an insurance agent who writes any other kind of insurance than that described in §4051.051 as required by the Commissioner for the protection of the insurance consumers of this state. Section 4051.053 authorizes a person holding a general property and casualty insurance agent license to write health and accident insurance for a property and casualty insurer authorized to sell those insurance products in this state. Section 4054.051(9) mandates that a person hold a general life, accident, and health insurance license if the person acts as an insurance agent who writes any other kind of insurance than that described in §4051.051 as required by the Commissioner for the protection of the insurance consumers of this state. Section 4056.052 enumerates the requirements that must be met in order for the Department to issue a nonresident insurance agent license to an applicant who holds an insurance agent license in another state. Section 4056.053 enumerates the requirements that must be met in order for the Department to issue a nonresident insurance agent license to an applicant who does not hold an insurance agent license in another state. Section 4056.054 enumerates the requirements that must be met in order for the Department to issue a nonresident insurance agent license to a corporation or partnership. 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 the state.



8. CROSS REFERENCE TO STATUTE. The following statutes are affected by this proposal:

Rule Statute

§§19.101 - 19.103 Insurance Code §§4001.003, 4001.005, 4001.105,

4001.106, 4001.152, 4001.153, 4001.154, 4001.155,

4001.156, 4051.051, 4051.053, 4054.051, 4056.052,

4056.053, and 4056.054.

9. TEXT.

SUBCHAPTER B. MEDICARE ADVANTAGE PLANS, MEDICARE ADVANTAGE PRESCRIPTION DRUG PLANS, AND MEDICARE PART D PLANS

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

(1) CMS--Centers for Medicare and Medicaid Services.

(2) CMS marketing guidelines--CMS' published marketing guidelines for use by Medicare Advantage Plans, Medicare Advantage Prescription Drug Plans, Prescription Drug Plans and 1876 Cost Plans, as revised July 25, 2006, and inclusive of all subsequent revisions.

(3) Department-Texas Department of Insurance.

(4) Marketing--Soliciting and/or selling.

(5) Medicare Plans--Medicare Advantage Plans, Medicare Advantage Prescription Drug Plans, and Prescription Drug Plans as described in the CMS marketing guidelines.

(6) Permanent license--A license issued to a person satisfying all the requirements of the Insurance Code §§4001.105, 4001.106, 4056.052, 4056.053, or 4056.054. The term does not include a temporary license issued under the Insurance Code §§4001.151 - 4001.154.

(7) Person--An individual, partnership, corporation, or depository institution as defined in the Insurance Code §4001.003(8).

§19.102. Agent Authority to Market Medicare Advantage Plans, Medicare Advantage Prescription Drug Plans, and Medicare Prescription Drug Plans.

(a) Persons holding a current permanent general life, accident, and health insurance license under the Insurance Code §4054.051 are authorized to act as marketing representatives to market Medicare plans pursuant to federal law, regulations and CMS marketing guidelines.

(b) In accord with the Insurance Code §4051.053, persons holding a current permanent general property and casualty insurance agent license under the Insurance Code §4051.051 are qualified to act as marketing representatives to market Medicare plans pursuant to federal law, regulations and CMS marketing guidelines, only to the extent that the Medicare plans are offered by a property and casualty insurer authorized to sell those products in this state.

(c) Unless qualifying under subsections (a) or (b) of this section, department licensees, including individuals holding a temporary general life accident and health insurance agent license or a temporary general property and casualty insurance agent license, are not qualified to act and are prohibited from acting as marketing representatives to market Medicare plans.

(d) Except for activities that are specifically authorized under federal law and CMS marketing guidelines to be performed by unlicensed persons, an insurer, health maintenance organization, or insurance agent is prohibited from assisting or participating in enrolling any individual in a Medicare plan contract marketed by an:

(1) agent that does not hold either:

(A) a permanent general life, accident and health insurance agent license; or

(B) a general property and casualty insurance agent licenses who are acting for a property and casualty insurer engaged in selling Medicare plans; or

(2) unlicensed person.

§19.103. Reporting Requirement. An insurer, health maintenance organization, or insurance agent is required to report in writing any violation of §19.102 of this subchapter (relating to Agent Authority to Market Medicare Advantage Plans, Medicare Advantage Prescription Drug Plans, and Medicare Prescription Drug Plans) within four calendar days of discovering the violation by first class United States mail to the Enforcement Division, Compliance Intake Unit, Mail Code 110-1A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104 or by other method acceptable to the department.











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