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Texas Department of Insurance
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Subchapter Z. Data Collecting and Reporting Relating to Mandated Health Benefits and Mandated Offers of Coverage

28 TAC §§21.3402 and 21.3404

The Texas Department of Insurance proposes amendments to §§21.3402 and 21.3404 concerning the collection and reporting of data related to mandated benefits and offers of coverage. The proposed amendments are necessary to provide the reported information to the Legislature in a more timely fashion, as well as to respond to a petition for adoption of rules. The proposed amendment to §21.3402 adds a definition of "reporting year" to clarify that the reporting year begins on October 1 of each year and ends on September 30 of the following year. The proposed amendment to §21.3404 effects changes to the annual reporting deadline. The proposed amendment changes the deadline for the first report from March 1, 2004, to April 1, 2004. This report will include data collected from January 1, 2003, through December 31, 2003 . Subsequently, the proposal would require entities subject to the rule to gather data during the reporting year (October 1 of each year through September 30 of the following year) and report the data by December 1 following the end of each reporting year. Thus, the second report will contain data gathered during the reporting year period of October 1, 2003 through September 30, 2004 , and be due on December 1, 2004 .

The change to the first reporting date is in response to a petition from the Texas Association of Life & Health Insurers (TALHI). TALHI notes that existing 28 TAC §21.3404 requires the reports on mandated benefits to be submitted by March 1, 2004 , and that all insurers are also required to file their annual financial statements on March 1 each year. TALHI states that it "places tremendous strains on both large and small companies to require these reports to be submitted at the same time that the annual financial statements are filed...Typically, the staff of an insurance company that would be required to prepare and implement a report as required by this rule is the same staff that is required to prepare and file annual financial statements." TALHI petitioned TDI to amend the rule "to change the date of the first report from March 1, 2004 to either April 1 or May 1, 2004." Staff recognizes the difficulty that TALHI references, particularly in the first year of implementation, and proposes a change in the first reporting date to April 1, 2004. For subsequent reports, staff proposes an annual due date of December 1. This change would ameliorate TALHI´s concerns about the strain of a March 1 reporting date as well as enhance legislative access to and use of the reported data. The change in reporting deadlines would decrease the age of the most recent data available to the Legislature at the commencement of each regular session from approximately thirteen months to four months. Thus the amendment will enhance the quality and timeliness of the report for the Legislature.

Kim Stokes, Senior Associate Commissioner, Life, Health and Licensing Division, has determined that for each year of the first five years the proposed sections will be in effect, there will be no fiscal impact to state and local governments as a result of the enforcement or administration of the rule. There will be no measurable effect on local employment or the local economy as a result of the proposal.

Ms. Stokes has determined that for each year of the first five years the sections are in effect, the proposed amendments will produce two principal public benefits: (1) more timely reporting of mandated benefits cost data to the Legislature, and (2) a more efficient reporting process for health benefit plan issuers.

Moving the reporting date for mandated benefits cost data from March 1 to December 1 will make more current the data available to the Legislature each regular session. Moreover, the current reporting date, March 1, is also the date that carriers´ must file their annual financial statements. Thus moving the reporting date to December 1 will also address TALHI´s stated problems by allowing health benefit plan issuers to allocate their workload more evenly throughout the year and alleviate the "tremendous strain" of the simultaneous reporting dates.

As this proposal simply shifts the times for collecting and report data under the existing rule and does not add any additional reporting requirements, compliance with the amendment will require only adjustment of internal processes to reflect the new collection period and reporting dates. Whether this action would result in any cost may vary among carriers depending on their systems for information processing. Even if a carrier should experience a cost from the amendment, such cost would be the result of the 77 th Legislature´s enactment of HB 1610, as the purpose of this amendment is to make more timely and efficient the report required by Insurance Code §§38.251 - 38.254. Moreover, TALHI´s petition indicates that changing the March 1 reporting date will be a positive change for the typical insurance carrier, large or small, and should thus result in a cost savings for those carriers by eliminating the need to double-duty staff and other resources already dedicated to producing annual financial statements. Therefore, it is the department´s position that the adoption of these proposed new sections will have no adverse economic effect on small businesses or micro-businesses. Nonetheless, the rule excludes from its scope health benefit plan issuers earning less than certain minimum amounts of direct premium in Texas ($10 million or more for group accident and health insurance policies; $2 million or more for individual accident and health insurance policies; and $10 million or more in direct commercial premiums for basic service health maintenance organizations). Beyond that exemption, the department does not believe it feasible to waive the requirements of these amendments for small businesses or micro-businesses. Such waiver would create two reporting dates for mandated benefit cost data, resulting in two separate reports and increasing the administrative complexity of the project. Moreover, having to compare two reports would make it more d ifficult to discern the tru e costs and effects of mandated benefits, frustrating the rule's purpose. The timing of the second report would also detract from the efficiency of the rule, as one of its principal purposes is to provide the Texas Legislature with data to aid consideration of the cost-effectiveness of health benefit mandates. As time is of the essence during legislative sessions, the amended rule serves this purpose by enabling submission of the reported data to the legislature as early as possible. Retaining a March 1 reporting date for small or microbusinesses would mean that the Legislature would not have access to the most recent data until very late in each session.

To be considered, written comments on the proposal must be submitted no later than 5:00 p.m. on November 10, 2003, 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 Kim Stokes, Senior Associate Commissioner, Life, Health and Licensing Division, Mail Code 107-2A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104. Any requests for a public hearing should be submitted separately to the Office of the Chief Clerk.

The amendments are proposed under the Insurance Code §§38.252 and 36.001. Section 38.252 directs the Commissioner to adopt rules requiring the reporting of specific data by health benefit plan issuers. 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 this state.

The following sections are affected by this proposal: Insurance Code §§38.251-38.254

§21.3402. Definitions. The following words and terms, when used in this subchapter, shall have the following meaning unless the context clearly indicates otherwise:

(1) ­ (8) (No Change.)

(9) Reporting year ­ A one year period, beginning each October 1 and ending the following September 30, during which health benefit plan issuers must collect the data required by §21.3407 of this Subchapter (relating to Reporting of Required Information).

§21.3404. Deadline for Submission of Reports.

(a) Health benefit plan issuers shall annually submit the report required by this subchapter no later than December 1 [March 1], and shall include all data for benefits and coverages for which payment was made during the previous [calendar] reporting year.

(b) Notwithstanding the requirements of subsection (a) of this section, the [The] first reporting date for the rule will be April [March] 1, 2004, for data collected from January 1, 2003 through December 31, 2003.

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