HBA-TYH, ATS H.B. 1498 76(R)BILL ANALYSIS Office of House Bill AnalysisH.B. 1498 By: Janek Insurance 7/21/1999 Enrolled BACKGROUND AND PURPOSE Prior to the 76th Legislature, state law gave an insured covered by a health insurance policy the right to select a primary care physician as long as the practitioner was licensed to provide the services and benefits included in the plan. Under a health maintenance organization (HMO), choices were usually limited to the list of participating providers. H.B. 1498 permits employees under an employer's health benefit plan to choose their own primary care physician by providing that, if the only networkbased coverage offered under an employee's health benefit plan (plan) is currently the only coverage offered by one or more HMOs, each providing HMO must offer an optional non-network plan to all eligible employees at the time of enrollment and at least annually, unless all providing HMOs enter into an agreement designating one or more of those HMOs to offer that coverage. The premium for the optional non-network plan is the responsibility of the employee, but the premium must be based on the actuarial value of that coverage. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the commissioner of insurance in SECTION 2 (Article 3.64, Insurance Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter A, Chapter 26, Insurance Code, by adding Article 26.09, as follows: Art. 26.09. AVAILABILITY OF HEALTH BENEFIT COVERAGE OPTIONS. (a) Defines "non-network plan," "point-of-service plan," and "preferred provider benefit plan." (b) Provides that, if the only network-based coverage offered under an employee's health benefit plan (plan) is currently the only coverage offered by one or more health maintenance organizations (HMOs), each providing HMO must offer an optional nonnetwork plan to all eligible employees at the time of enrollment and at least annually, unless all providing HMOs enter into an agreement designating one or more of those HMOs to offer that coverage. Authorizes such coverage to be provided through a pointof-service contract, a preferred provider benefit plan, or any coverage arrangement that allows an enrollee access to services outside the HMO's or limited provider network's delivery network. (c) Requires the premium for the required coverage to be based on the actuarial value of that coverage. Authorizes that premium to be different than the premium for the HMO coverage. (d) Authorizes the imposition of different cost-sharing provisions for the point-of-service contract. Authorizes those cost sharing provisions to be higher than cost sharing provisions for in-network HMO coverage. Authorizes higher cost sharing for enrollees in limited provider networks to be imposed only when obtaining benefits or services outside the HMO delivery network. (e) Provides that any additional costs for the non-network plan are the responsibility of the employee who chooses the non-network plan. Authorizes the employer to impose a reasonable administrative cost for providing the non-network plan option. (f) Provides that this article does not apply to a small employer health benefit plan or a group model health maintenance organization that is a nonprofit, state-certified health maintenance organization that provides the majority of its professional services through a single group medical practice that is governed by a board composed entirely of physicians and that educates medical students or resident physicians through a contract with the medical school component of a Texas state-supported college or university accredited by the Accrediting Council on Graduate Medical Education or the American Osteopathic Association. SECTION 2. Amends Subchapter F, Chapter 3, Insurance Code, by adding Article 3.64, as follows: Art. 3.64. CONTRACTS BETWEEN HEALTH MAINTENANCE ORGANIZATIONS AND INSURERS. (a) Defines "blended contract," "health maintenance organization," "insurance carrier," and "point-of-service plan" for purposes of this article. (b) Authorizes an insurance carrier to contract with an HMO to provide benefits under a point-of-service plan, including optional coverage for out-of-area services or out-ofnetwork care. (c) Authorizes an insurance carrier and an HMO to offer a blended contract if indemnity benefits are combined with HMO benefits. Provides that the use of a blended contract is limited to point-of-service arrangements between an insurance carrier and an HMO. (d) Provides that a blended contract delivered, issued, or used in this state is subject to and must be filed with the Texas Department of Insurance (department) for approval as provided by Articles 3.42 (Policy Form Approval) and 20A.09(a)(5) (Evidence of Coverage and Charges). (e) Authorizes indemnity benefits and services provided under a point-of-service plan to be limited to those services as defined by the blended contract. Authorizes indemnity benefits and services provided under a point-of-service plan to be subject to different costsharing provisions. Authorizes the cost-sharing provisions for the indemnity benefits to be higher than cost sharing provisions for in-network HMO coverage. Authorizes higher cost sharing for enrollees in limited provider networks to be imposed only when obtaining benefits or services outside the HMO delivery network. (f) Authorizes the commissioner of insurance to adopt rules to implement this article. SECTION 3. Amends Section 2, Article 20A.02, Insurance Code (Texas Health Maintenance Organization Act), by amending Subsection (i) and by adding Subsections (aa) and (bb), as follows: (i) Includes a blended contract within the definition of "evidence of coverage." (aa) Defines "blended contract." (bb) Defines "point-of-service plan." SECTION 4. Amends Section 6, Article 20A.06, Insurance Code (Texas Health Maintenance Organization Act), by amending Subsection (a) and adding Subsection (c), as follows: (a) Adds a point-of-service plan under Article 3.64 and a point-of-service rider (rider) under Subsection (c) in the list of insurance coverages an HMO is authorized to offer. (c) Authorizes an HMO to offer a rider for out-of-network coverage without a need to obtain a separate insurance carrier license if the expenses incurred under the rider do not exceed 10 percent of the total medical and hospital expenses incurred for all health plan products sold. Requires the HMO, if these expenses do exceed the 10 percent cap, to cease issuing new riders until the expenses fall below 10 percent or until the HMO obtains an insurance carrier license. Authorizes the limitation of indemnity benefits and services provided under a rider to those services defined in the evidence of coverage. Authorizes the imposition of different cost-sharing provisions for these benefits and services. Authorizes those cost sharing provisions to be higher than cost sharing provisions for in-network HMO coverage. Authorizes higher cost sharing for enrollees in limited provider networks to be imposed only when obtaining benefits or services outside the HMO delivery network. Provides that an HMO that issues a rider must meet the net worth requirements promulgated by the commissioner based on the actuarial relation of the amount of insurance risk assumed through the issuance of the rider in relation to the amount of solvency and reserve requirements already required of the HMO. SECTION 5.Effective date: September 1, 1999. Makes application of this Act prospective for a health benefit plan that is delivered, issued for delivery, or renewed on or after January 1, 2000. SECTION 6.Emergency clause.