HBA-ATS C.S.H.B. 1498 76(R)BILL ANALYSIS


Office of House Bill AnalysisC.S.H.B. 1498
By: Janek
Insurance
4/16/1999
Committee Report (Substituted)



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.  C.S.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 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, 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 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. 

(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. 

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. 

(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 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.  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.

COMPARISON OF ORIGINAL TO SUBSTITUTE

C.S.H.B. 1498 modifies the original bill in SECTION 1 by amending
Subchapter A, Chapter 26, Insurance Code, rather than Subchapter E, Chapter
21, Insurance Code, to add Article 26.09, rather than Article 21.74. 

The substitute modifies Article 21.74(1) by redesignating it as Article
26.09.  In proposed Subsection (a), the substitute  redefines "non-network
plan" by deleting the provision that authorizes a nonnetwork plan to
include but is not limited to a point-of-service plan or a preferred
provider plan.  The substitute also makes nonsubstantive changes in
proposed Subsection (a). 

The substitute modifies proposed Article 21.74(2)(a) by redesignating it as
Article 26.09(b) and by providing the exception that if all health
maintenance organizations (HMOs) enter into an agreement designating one or
more of those HMOs to 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, then the HMOs do not have to offer a non-network
plan if the HMO's own network-based coverage is currently the only coverage
offered.  The substitute also authorizes such coverage to be provided
through a point-of-service contract, rather than through a point of service
plan, a preferred provider benefit plan, or any coverage arrangement that
allows the enrollee access to services outside the HMO's delivery network.
The substitute makes nonsubstantive changes. 

The substitute modifies proposed Article 21.74(2)(b) by redesignating it as
Article 26.09(c) and by making nonsubstantive changes. 

The substitute modifies proposed Article 21.74(2)(c) by redesignating it as
Article 26.09(d) and by authorizing the imposition of different
cost-sharing provisions for the point-of-service contract, rather than the
point of service option.  The substitute also makes nonsubstantive changes. 

The substitute modifies proposed Article 21.74(2)(d) by redesignating it as
Article 26.09(e). 

The substitute modifies proposed Article 21.74(2)(e) by redesignating it as
Article 26.09(f) and by providing that this article does not apply to a
small employer health benefit plan, rather than 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. 

C.S.H.B. 1498 modifies the original bill by redesignating SECTION 3 of the
original as SECTION 2.  The original bill had no SECTION 2.  In proposed
Article 3.64(a), the substitute specifies that a "point-of-service plan"
means either of the two arrangements, through the use of the conjunction
"or."  The substitute also makes nonsubstantive changes by rearranging the
definitions in alphabetical order.  In proposed Article 3.64(b), the
substitute specifies that the benefits are provided under a
point-of-service plan.  In proposed Article 3.64(c), the substitute makes a
nonsubstantive change.  In proposed Article 3.64(e), the substitute makes
nonsubstantive changes. 

C.S.H.B. 1498 modifies the original bill by redesignating  SECTION 4 of the
original to SECTION 3. In proposed Subsection (bb), the substitute makes a
nonsusbtantive change to the definition of "point-of-service plan" and
specifies that a "point-of-service plan" means either of the two
arrangements, through the use of the conjunction "or." 

In new SECTION 4, the substitute amends Section 6, Article 20A.06,
Insurance Code (Texas Health Maintenance Organization Act), by amending
Subsection (a) and adding Subsection (c).  In Article 20A.06(a), the
substitute adds a point-of-service plan under Article 3.64 and a
point-of-service rider under proposed Article 20A.06(c) in the list of
insurance coverages an HMO is authorized to offer. In proposed Article
20A.06(c), the substitute 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
products sold.  The substitute 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.  The substitute authorizes the limitation of indemnity benefits
and services provided under a rider to those services defined in the
evidence of coverage.  The substitute authorizes the imposition of
different cost-sharing provisions for these benefits and services.  The
substitute authorizes those cost sharing provisions to be higher than cost
sharing provisions for innetwork HMO coverage.  The substitute 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.