Bill Text: TX HB2782 | 2013-2014 | 83rd Legislature | Engrossed
Bill Title: Relating to the authority of the commissioner of insurance to disapprove rate changes for certain health benefit plans.
Spectrum: Bipartisan Bill
Status: (Engrossed - Dead) 2013-05-16 - Left pending in committee [HB2782 Detail]
Download: Texas-2013-HB2782-Engrossed.html
By: Smithee | H.B. No. 2782 |
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relating to the authority of the commissioner of insurance to | ||
disapprove rate changes for certain health benefit plans. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Title 8, Insurance Code, is amended by adding | ||
Subtitle K to read as follows: | ||
SUBTITLE K. RATES | ||
CHAPTER 1671. RATES FOR CERTAIN COVERAGE | ||
SUBCHAPTER A. GENERAL PROVISIONS | ||
Sec. 1671.001. APPLICABILITY OF CHAPTER. (a) This chapter | ||
applies only to rates for the following health benefit plans: | ||
(1) an individual major medical expense insurance | ||
policy to which Chapter 1201 applies; | ||
(2) individual health maintenance organization | ||
coverage; | ||
(3) a group accident and health insurance policy | ||
issued to an association under Section 1251.052; | ||
(4) a blanket accident and health insurance policy | ||
issued to an association under Section 1251.358; | ||
(5) group health maintenance organization coverage | ||
issued to an association described by Section 1251.052 or 1251.358; | ||
or | ||
(6) a small employer health benefit plan provided | ||
under Chapter 1501. | ||
(b) This chapter applies only to rates for a health benefit | ||
plan described by Subsection (a) that provides creditable coverage | ||
as defined by Section 1205.004(a). | ||
(c) This chapter does not apply to rates for coverage | ||
provided through the Texas Health Insurance Pool. | ||
Sec. 1671.002. APPLICABILITY OF OTHER LAWS GOVERNING RATES. | ||
The requirements of this chapter are in addition to any other | ||
provision of this code governing health benefit plan rates. Except | ||
as otherwise provided by this chapter, in the case of a conflict | ||
between this chapter and another provision of this code, this | ||
chapter controls. | ||
SUBCHAPTER B. RATE STANDARDS | ||
Sec. 1671.051. EXCESSIVE, INADEQUATE, AND UNFAIRLY | ||
DISCRIMINATORY RATES. (a) A rate is excessive, inadequate, or | ||
unfairly discriminatory for purposes of this chapter as provided by | ||
this section. | ||
(b) A rate is excessive if the rate is likely to produce a | ||
long-term profit that is unreasonably high in relation to the | ||
health benefit plan coverage provided. | ||
(c) A rate is inadequate if: | ||
(1) the rate is insufficient to sustain projected | ||
losses and expenses to which the rate applies; and | ||
(2) continued use of the rate: | ||
(A) endangers the solvency of a health benefit | ||
plan issuer using the rate; or | ||
(B) has the effect of substantially lessening | ||
competition or creating a monopoly in a market. | ||
(d) A rate is unfairly discriminatory if the rate: | ||
(1) is not based on sound actuarial principles; | ||
(2) does not bear a reasonable relationship to the | ||
expected loss and expense experience among risks or is based on | ||
unreasonable administrative expenses; or | ||
(3) is based wholly or partly on the race, creed, | ||
color, ethnicity, or national origin of an individual or group | ||
sponsoring coverage under or covered by the health benefit plan. | ||
SUBCHAPTER C. DISAPPROVAL OF RATE CHANGES | ||
Sec. 1671.101. REVIEW OF PREMIUM RATE CHANGES. The | ||
commissioner by rule shall establish a process under which the | ||
commissioner: | ||
(1) reviews health benefit plan rate changes for | ||
compliance with this chapter and other applicable law; and | ||
(2) disapproves rates that do not comply with this | ||
chapter not later than the 60th day after the date the department | ||
receives a complete filing. | ||
Sec. 1671.102. DISAPPROVAL OF RATE CHANGE AUTHORIZED. (a) | ||
The commissioner may disapprove a rate change filed with the | ||
department by a health benefit plan issuer not later than the 60th | ||
day after the date the department receives a complete filing if: | ||
(1) the commissioner determines that the proposed rate | ||
is excessive, inadequate, or unfairly discriminatory; or | ||
(2) the required rate filing is incomplete. | ||
(b) In making a determination under this section, the | ||
commissioner shall consider the following factors: | ||
(1) the reasonableness and soundness of the actuarial | ||
assumptions, calculations, projections, and other factors used by | ||
the plan issuer to arrive at the proposed rate change; | ||
(2) the historical trends for medical claims | ||
experienced by the plan issuer; | ||
(3) the reasonableness of the plan issuer's historical | ||
and projected administrative expenses; | ||
(4) the plan issuer's compliance with medical loss | ||
ratio standards applicable under state or federal law; | ||
(5) whether the rate change applies to an open or | ||
closed block of business; | ||
(6) whether the plan issuer has complied with all | ||
requirements for pooling risk and participating in risk adjustment | ||
programs in effect under state or federal law; | ||
(7) the financial condition of the plan issuer for at | ||
least the previous five years, or for the plan issuer's time in | ||
existence, if less than five years, including profitability, | ||
surplus, reserves, investment income, reinsurance, dividends, and | ||
transfers of funds to affiliates or parent companies; | ||
(8) the financial performance for at least the | ||
previous five years of the block of business subject to the proposed | ||
rate change, or for the block's time in existence, if less than five | ||
years, including past and projected profits, surplus, reserves, | ||
investment income, and reinsurance applicable to the block; | ||
(9) changes to the covered benefits or health benefit | ||
plan design; | ||
(10) the allowable variations for case | ||
characteristics, risk classifications, and participation in | ||
programs promoting wellness; and | ||
(11) whether the proposed rate change is necessary to | ||
maintain the plan issuer's solvency or maintain rate stability and | ||
prevent excessive rate increases in the future. | ||
(c) In making a determination under this section, the | ||
commissioner may consider the following factors: | ||
(1) if the commissioner determines appropriate for | ||
comparison purposes, medical claims trends reported by plan issuers | ||
in this state or in a region of this country or the country as a | ||
whole; and | ||
(2) inflation indexes. | ||
Sec. 1671.103. DISPUTE RESOLUTION. The commissioner by | ||
rule shall establish a method for a health benefit plan issuer to | ||
dispute the disapproval of a rate change under this subchapter, | ||
which may include an informal method for the plan issuer and the | ||
commissioner to reach an agreement about an appropriate rate. | ||
Sec. 1671.104. USE OF DISAPPROVED RATE PENDING DISPUTE | ||
RESOLUTION. (a) If the commissioner disapproves a rate change | ||
under this subchapter and the plan issuer objects to the | ||
disapproval, the plan issuer may use the disapproved rate pending | ||
the completion of: | ||
(1) the dispute resolution process established under | ||
this subchapter; and | ||
(2) any other appeal of the disapproval authorized by | ||
law and pursued by the plan issuer. | ||
(b) The commissioner shall adopt rules establishing the | ||
conditions under which any excess premiums will be refunded or | ||
credited to the persons who paid the premiums if the plan issuer | ||
uses a disapproved rate while an appeal is pending and | ||
the rate | ||
dispute is not resolved in the plan issuer's favor. | ||
Sec. 1671.105. FEDERAL FUNDING. The commissioner shall | ||
seek all available federal funding to cover the cost to the | ||
department of reviewing rates and resolving rate disputes under | ||
this subchapter. | ||
SECTION 2. Subtitle K, Title 8, Insurance Code, as added by | ||
this Act, applies only to rates for health benefit plan coverage | ||
delivered, issued for delivery, or renewed on or after January 1, | ||
2014. Rates for health benefit plan coverage delivered, issued for | ||
delivery, or renewed before January 1, 2014, are governed by the law | ||
in effect immediately before the effective date of this Act, and | ||
that law is continued in effect for that purpose. | ||
SECTION 3. This Act takes effect September 1, 2013. |