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Subchapter D. Regulatory Requirements for an HMO

Subsequent to Issuance of Certificate of Authority

28 TAC §11.301

The Commissioner of Insurance adopts amendments to §11.301 concerning certain health maintenance organization (HMO) filings. The amendments are adopted with changes to the proposed text as published in the December 6, 2002 issue of the Texas Register (27 TexReg 11478).

The amendments to §11.301 are necessary to provide uniformity in the establishment of a billing system for filing fees which is added by new §7.1302 published elsewhere in this issue of the Texas Register. Under new §7.1302, filing fees for certain filings made pursuant to Chapters 3 and 11 will be subject to the billing system. The new billing system will reduce the labor intensive process of refunding fee amounts received in excess of the actual fee amount and eliminate the need to reject filings due to insufficient fee amounts.

Upon completion of the development and design of the billing system, the department will issue a commissioner´s bulletin to notify regulated entities affected by the billing system of the official implementation date and of the specific date when they should cease submitting filing fee(s) along with certain filings to the department. An HMO submitting a filing will be billed by itemized invoice from the department. The amendments to §11.301 are necessary to ensure uniformity with and the effective and efficient use of the new billing system created by §7.1302.

Section 11.301 was changed to correct a misspelled word in (5)(E) and to replace language which was inadvertently omitted in a prior amendment to (7)(B).

No comments were received.

The amendments are adopted pursuant to Insurance Code Articles 20A.22, 20A.32, and §36.001. Insurance Code Article 20A.22 provides that the commissioner may promulgate such reasonable rules as are necessary and proper to carry out the provisions of the HMO Act. Insurance Code Article 20A.32 requires that the expenses for filing fees for every organization subject to Insurance Code Chapter 20A shall be paid in accordance with rules adopted by the commissioner. Insurance Code §36.001 authorizes the commissioner of insurance to adopt rules for the conduct and execution of the powers and duties of the department as authorized by statute.

§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 Requests). These requirements include filing changes necessitated by federal or state law or regulations.

(1) Completeness of filings. 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, Articles 20A.04(b) and 20A.09(l) is considered complete when all information required by this section, §11.302 of this title, and §§11.1901-11.1903 of this title (relating to Quality of Care) that is applicable and reasonably necessary for a final determination by the department, has been filed with the department.

(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 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) The identifying form number must appear in the lower left-hand corner of the page. In the case of a multiple page document, the identifying form number must appear on the lower left-hand corner of the first page. Page numbers should appear on subsequent pages.

(B) If an item is to be replaced or revised subsequent to issuance of a certificate of authority, a new identifying form number must be assigned. A change in address or phone number on a form will not require a new identifying form number. A new edition date added to the original identifying form number is an acceptable way of revising the number so that it is identifiable from any previously approved item; e.g., if G-100 was the originally approved number, the revision may be numbered G-100 12/79. Changing the case of the suffix is not considered to be a change in the number, e.g., "ED" and "ed" or "REV" and "rev" are the same for form numbering purposes.

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

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

(B) an original and four copies of such supporting documentation as considered necessary by the commissioner for review of the filing; and

(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 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 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 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) the evidence of coverage and related forms, as described in §11.501 of this title (relating to Forms Which Must Be Approved Prior to Use);

(B) a description and a map of the service area, with key and scale, which shall identify the county or counties or portions thereof to be served;

(C) the form of all contracts described in §11.204(13)(A) and (C) of this title, including any amendments to contracts described in §11.204(13)(A) and (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) of this title (relating to Definitions);

(E) transactions with affiliates related to the purchase, construction, or renovation of hospitals, medical facilities, administrative offices, or any other property which represent more than one-half of 1.0% of admitted assets of the HMO, as well as transactions involving the lease, operation, or maintenance of hospitals, medical facilities, administrative offices, or any other property from or by an affiliate if the monthly cost for such transaction exceeds one-half of 1.0% of all the monthly expenses of the HMO or such agreement places a lien on any property owned by the HMO;

(F) dividends which do not meet the requirements specified in §11.807 of this title (relating to Dividends);

(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;

(H) a copy of any proposed amendment to basic organizational documents. If the approved amendment must be filed with the secretary of state, an original, or a certified copy of such document with the original file mark of the secretary of state, shall be filed with the commissioner;

(I) a copy of any amendments to bylaws of the HMO, with a notarized certification bearing the original signature of the corporate secretary of the HMO that it is a true, accurate, and complete copy of the original;

(J) any name, or assumed name, on a form, as specified in §11.105 of this title (relating to Use of the Term "HMO," Service Mark, Trademarks, d/b/a);

(K) any agreement by which an affiliate agrees to handle an HMO's investments pursuant to §11.804 of this title (relating to Investment Management by Affiliate Companies);

(L) any material change in the HMO's emergency care procedures; and

(M) any original guarantees, modifications to existing guarantees specified in §11.808 of this title (relating to Guarantee from a Sponsoring Organization) and guarantees relating to Medicaid business as specified in §§11.1801-11.1806 of this title (relating to Solvency Standards for Managed Care Organizations Participating in Medicaid).

(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, 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 schedule of charges, as defined in §11.2(b) of this title;

(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 During Examinations);

(E) any change of the certificate of authority for a domestic or foreign HMO. If the HMO is a foreign HMO, a certified copy of the certificate of authority and power of attorney must be submitted;

(F) any new trademark or service mark, or any changes to an existing trademark or service mark;

(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 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 transmittal form, must be answered;

(H) any insurance contracts or amendments thereto, guarantees, or other protection against insolvency, including the stop-loss or reinsurance agreements, if changing the carrier or description of coverage, as described in §11.204(15) of this title;

(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, Article 20A.04(13) and §11.1600 of this title (relating to Information to Prospective and Current Group Contract Holders and Enrollees);

(L) modifications to any types of compensation arrangements, such as compensation based on fee-for-service arrangements, risk-sharing arrangements, or capitated risk arrangements, made to physicians and providers in exchange for the provision of, or the arrangement to provide health care services to enrollees, including any financial incentives for physicians and providers;

(M) any material change in network configuration; and

(N) a description of the quality assurance program, including a peer review program, as required by the Insurance Code, Article 20A.05(a)(1). Descriptions of arrangements for sharing pertinent medical records between physicians and/or providers contracting or subcontracting pursuant to paragraph (13)(B) of §11.204 of this title with the HMO and assuring the records' confidentiality must also be provided.

(6) Approval time period. Any modification for which commissioner's approval is required is considered approved unless disapproved within 30 days from the date the filing is determined by the department to be complete. The commissioner may postpone the action for a period not to exceed 30 days, as necessary for proper consideration. The HMO will be notified by letter of any postponement.

(7) Filing 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) Incomplete filing. The written notice of an incomplete filing shall state that the filing is not complete and has not been accepted for review. In addition, the notice shall specify the information, documentation and corrections necessary to make the filing complete, as provided in paragraph (1) of this section. If a filing is resubmitted, in whole or in part, and is still incomplete, an additional written notice shall be issued. Such notice shall specify the corrections or information necessary for completeness, and state that the 30 day deemer will not begin until the date the department determines the filing to be complete. If a filing is not resubmitted within 30 days of the date of the written notice of incompleteness, then the filing shall be considered withdrawn by the department and closed.

(B) Processing of complete filing. The department shall in writing approve or disapprove a complete filing within the period of time set forth in paragraph (6) of this section, beginning on the date the filing is determined to be complete. The HMO may waive in writing the statutory deemer.

(C) Pending status. Complete filings will be approved or disapproved in writing within the statutory deemer period set forth in paragraph (6) of this section unless, prior to the department's issuance of notice of proposed negative action pursuant to §1.704(a) of this title (relating to Summary Procedure; Notice), the HMO has been contacted by the department regarding corrections or additional information necessary for commissioner's approval, and files with the department a written consent to waive the statutory deemer. The deemer shall be waived upon the department's receipt of the HMO's written consent. The filing shall be held in a pending status for 45 days from the date of the applicable statutory deemer, either on the 30th or 60th day from the date the filing is complete. If the necessary corrections or additional information have not been filed by the end of 45 days the filing shall be considered withdrawn.

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