HBA-ATS H.B. 1498 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1498 By: Janek Insurance 3/2/1999 Introduced BACKGROUND AND PURPOSE State law gives an insured covered by a health insurance policy the right to select a primary care physician as long as the practitioner is licensed to provide the services and benefits included in the plan. Under a health maintenance organization (HMO), choices are 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 requiring a health maintenance organization to offer an optional non-network plan to all eligible employees, if the HMO's own network-based coverage is currently the only coverage offered. 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 3 (Article 3.64, Insurance Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter E, Chapter 21, Insurance Code, by adding Article 21.74, as follows: Art. 21.74. AVAILABILITY OF HEALTH BENEFIT COVERAGE OPTIONS. Sec. 1. DEFINITIONS. Defines "non-network plan," "point-of-service plan," and "preferred provider benefit plan." Sec. 2. OFFERING OF HEALTH BENEFIT COVERAGE OPTIONS. (a) Provides that a health maintenance organization (HMO) must offer an optional non-network plan to all eligible employees under an employer's health benefit plan at the time of enrollment and at least annually, if the HMO's own network-based coverage is currently the only coverage offered. Authorizes such coverage to be provided through a point of service plan, a preferred provider benefit plan, or any coverage arrangement that allows access to services outside the HMO's delivery network. (b) Requires the premium for the optional non-network plan to be based on the actuarial value of that coverage. Authorizes that premium to be different than the premium for the HMO coverage. (c) Authorizes the imposition of different cost sharing provisions for the point of service option. Authorizes those cost sharing provisions to be higher than cost sharing provisions for in-network HMO coverage. (d) 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. (e) Provides that this article does not apply to an employer who employed an average of at least two but not more than 50 eligible employees on business days during the preceding calendar year and who employs at least two eligible employees on the first day of the plan year. SECTION 2. Bill contains no SECTION 2. SECTION 3. Amends Subchapter F, Chapter 3, Insurance Code, by adding Article 3.64, as follows: Art. 3.64. INSURERS CONTRACTING WITH HEALTH MAINTENANCE ORGANIZATIONS. (a) DEFINITIONS. Defines "insurance carrier," "health maintenance organization," "point of service plan," and "blended contract" for purposes of this article. (b) Authorizes an insurance carrier to contract with an HMO to provide a point-of-service benefit, including optional coverage for out-of-area services or out-of-network 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 cost sharing provisions. Authorizes the cost sharing provisions for the indemnity benefits to be higher than cost sharing provisions for in-network HMO coverage. (f) Authorizes the Commissioner of Insurance to adopt rules to implement this article. SECTION 4. 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 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.