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.