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									LHL Legislative Implementation
   2006 LHL Compliance Conference

        October 31-November 1, 2006


                 Bill Bingham
   Deputy Commissioner for Regulatory Matters
       Life, Health, and Licensing Program
         Texas Department of Insurance
          bill.bingham@tdi.state.tx.us
             Eligible Employees
   Clarifies that an employer plan must cover at least two
    other eligible employees before it must cover a sole
    proprietor, partner, or independent contractor who
    does not otherwise qualify as an eligible employee.
   The number of hours an independent contractor, sole
    proprietor or partner works weekly is irrelevant to the
    individual´s status as an eligible employee.
   Contribution requirements limit gaming.
                    Documents
   §§26.7(c) & 26.304(c) -- reasonable and appropriate
    support of employer/employee status
   Expands the list of suggested documents:
    W-2 Summary Wage and Tax Form or other federal or
    state tax records; a loan agreement; an invoice; a
    business check; a sales tax license; articles of
    incorporation or other business entity filings with the
    Secretary of State; assumed name filings; professional
    licenses; and reports required by the Texas Workforce
    Commission.
               Documents con’t
   Production of any single document may be but
    is not necessarily sufficient to prove status as a
    small employer.
   Cooperatives – Article 26.14 sets out a specific
    list of documents that an entity must obtain to
    qualify as a cooperative.
   Each employer member of the cooperative is
    subject to individual requirements.
       Agents-- 26.13(n); 26.307(g)
   Prohibits terminating, failing to renew, limiting its
    contract or agreement of representation with, or taking
    any other negative action against an agent for
    requesting issuance or renewal of an employer health
    benefit plan.
   Implements Article 26.72. Negative actions include
    those enumerated as well as any other that would have
    an adverse effect on an agent tending to reduce access
    to employer health benefit plans.
                     Effective Date
   §26.4(14) defines "effective date" to be the first day of
    coverage under a health benefit plan, or, if there is a
    waiting period, the first day of the waiting period.
       Revised §26.9 prohibits a preexisting condition provision in
        an employer plan generally from applying to expenses
        incurred on or after the expiration of the 12 months
        following the initial effective date of coverage. As the rule
        defines effective date, that 12 month period begins to run on
        the first day of any waiting period.
       §26.306(b) also deleted the term “initial” as redundant. There
        is only one effective date of coverage – either the actual
        effective date of coverage or the first day of the waiting
        period.
      Creditable Coverage & Waiting
                  Periods
   Waiting period and any preexisting condition exclusion period
    run concurrently.
   To illustrate, assume an individual with six months of creditable
    coverage enrolls in his new employer's plan on January 1, 2005;
    that the plan imposes a 90-day waiting period; and that the
    carrier imposes a 12-month preexisting condition exclusion.
   The waiting period and preexisting condition exclusion period
    both begin to run concurrently on January 1, 2005, and the
    waiting period expires on April 2, 2005. The coverage actually
    takes effect on April 3, 2005. The preexisting condition exclusion
    period must by law expire no later than December 31, 2005, so
    reducing it by six months for the employee's credit will cause it
    to end on June 30, 2005.
                     Look-back
   Consistent with the other applications discussed
    previously, the six-month period prior to the effective
    date of coverage which a carrier may examine to
    determine whether an individual has a preexisting
    condition begins on the effective date of coverage.
   Revised §§26.9(a)(9) and 26.306(c) eliminate duplicative
    language and express this standard consistent with the
    rule´s definition of "effective date."
        Geographic Service Areas
   §§26.6(c)(3) [26.302] -- If the service area for a
    carrier is the entire state of Texas, a carrier need
    not provide additional documentation.
   This documentation includes both the required
    map and the required list of ZIP codes.
                          Rate Quotes
   Premium rate quote--A statement of the premium a small or large employer
    carrier offers and will accept to make coverage effective for a small or large
    employer.
   Does not disturb the good-faith practice of providing a preliminary estimate
    for the convenience of prospective customers -- so long as the carrier makes
    clear that the estimate is not a premium rate quote.
   Gathering the information needed for a formal rate quote should be
    expeditious and predictable. A small employer carrier must provide a
    premium rate quote within 15 business days of receiving a completed
    application for coverage and individual enrollment forms.
   The carrier may request certain additional information necessary to provide
    the premium rate quote, tolling the running of the 15-day period until receipt.
    Requested information must use the applicable rate manual and associated
    underwriting guidelines developed pursuant to §26.11 necessary to provide
    the premium rate quote.
          Group Size Cancellation
   A carrier may terminate coverage if a small employer fails to
    meet, for a period of at least six consecutive months, the
    qualifying minimum group size requirement.
   Termination no earlier than the first day of the next month
    following the end of the six-month consecutive period during
    which the employer did not meet the requirement.
   Termination must be in accordance with the terms and
    conditions of the plan and with applicable Texas law.

                               28 TAC §26.8(j)
          Medicare Supplement
   MMA
     Definitions
     Phase out of prescription drug plans

     Minimum benefit standards

     New Plans K & L

     Notice requirements
         Formerly Dual Eligibles
   28 TAC §3.3312 makes an individual losing
    eligibility for health benefits under Title XIX of
    the Social Security Act (Medicaid) an eligible
    person.
   This individual is eligible for guaranteed issuance
    of Plans A, B, C, F (including high deductible),
    K, or L offered by any issuer.
   Persons under 65 years of age are eligible for
    guaranteed issuance of only Plan A.
    High Deductible Health Plans
   HB 1602 added new Chapter 1653 to the TIC, authorizing a
    carrier to apply deductible or copayment requirements to
    benefits, including state-mandated health benefits, to qualify a
    health benefit plan as an HDHP.
   A qualified HSA must meet standards specified in IRC §223,
    including a requirement that an eligible individual be covered
    under an HDHP, a health plan that satisfies certain requirements
    with respect to minimum deductibles and maximum out-of-
    pocket expenses. Generally, an HDHP may not provide benefits
    for any year until the deductible for that year is satisfied.
   The IRC provides a safe harbor for plans that do not impose a
    deductible for preventive care. An HDHP may therefore
    provide preventive care benefits without a deductible, or with a
    deductible below the minimum annual deductible.
         Application to Texas Law
   Texas law requires provision of certain health care benefits or
    services without regard to a deductible, and health carriers must
    follow federal guidance regarding whether such benefits or
    services fall within the preventive care safe harbor.
   Examples include coverage of certain childhood immunizations
    and certain screening tests for hearing loss in children.
   IRS Bulletin 2004-15 identifies both of these types of benefits or
    services as within the safe harbor, so the rule does not authorize
    a carrier to apply a deductible or copayment requirement to these
    benefits or services.
   Bulletin 2004-15 also indicates the IRS may publish additional
    guidance on the definition of preventive care, so carriers should
    monitor IRS publications to remain in compliance.
      Health Group Cooperatives
   SB 805
   Made participation by issuers (generally)
    voluntary.
   Segregated small and large employers.
   Created sub (p) small employer HGCs, treated
    as small employers -- premium rates, issuance
    and renewal.
   Made HGCs a single employer under the TIC.
                 Rule Amendments
   §26.407 requires a health carrier to file information with TDI
    concerning intended offers of coverage to a cooperative not later
    than 30 days before the initial open enrollment period for the
    cooperative and contains revised specific information concerning
    the offer of coverage to the cooperative that the health carrier
    must provide.
   §26.408 provides that, subject to service area limitations, a health
    carrier may elect not to offer or issue coverage to health group
    cooperatives or may elect to offer or issue coverage to one or
    more health group cooperatives of its choosing.
   Rule also clarifies a carrier must comply with the specified
    guaranteed issuance requirements in offering and issuing
    coverage to health group cooperatives that have made the sub
    (p) election.
     Small Only or Large Only

The membership of a health group cooperative
may consist only of small employers or may
consist only of large employers, but may not
consist of both small and large employers.
                      TIC §1501.0581(a)
    Health Group Cooperative as
     Small Employer [sub (p)]
   Composed only of small employers.
   Has made the election described by Section
    1501.0581(o)(1).
   In accordance with Subsection (p) of that section
   Treated as a small employer for the purposes of this
    chapter with regard to:
      premium rates;
      issuance of coverage; and
      renewal of coverage.
                                TIC §1501.063(b-1)
      Health Group Cooperative
         as Large Employer
   Can be composed of small employers not
    electing to limit group size.
   Can be composed only of large employers.
   Treated in the same manner as a large employer
    for the purposes of this chapter:
      premium rates;
      issuance of coverage; and
      renewal of coverage.
                         TIC §1501.063(b-2)
               History
After considerable interest on the part of
employers, the SB 805 changes have
resulted in issuance of HGCs. Two are
presently operating, and at least two other
carriers are working toward agreements to
do so.
    1 industry specific
    1 regional
                              SB 51
   Requires a group holder to continue to pay premium for, and a
    carrier to provide coverage to, an individual until the end of the
    month in which the group holder notifies the carrier that the
    individual is no longer part of the group eligible for coverage
    under the policy.
   The scope runs according to type of plan – those issued pursuant
    to TIC Chapters 843 and 1301 -- not by type of benefits or
    services. A vision or dental coverage contract issued pursuant to
    one of these chapters is subject to SB 51.
   Does not impose requirements on a group holder or carrier
    when an entire group ends coverage under a health benefit plan
    or when an individual terminates coverage while remaining part
    of the group eligible for coverage.
              Definitions
§21.4002 defines "month" to allow the parties to
provide by contract the start and end of the
monthly period.
             Receipt -- §21.4003
   Codifies the "mailbox rule”.
   Allows parties to maintain evidence of written
    notifications in a mail log to provide proof of
    submission and establish date of receipt.
   Modeled on 28 TAC §21.2816(h), relating to
    submission of clean claims.
    Additional Notification Period
   §21.4003(c) allows an additional notification period of three
    business days at the beginning of each month.
   Eligibility must have ended within seven calendar days prior to
    the end of the month.
   Must be immediate written notification, such as an internet
    portal, electronic mail, or telefacsimile, and by an agreeable
    method.
   If submitted electronically, presumed received on the date
    submitted; if hand-delivered, presumed received on the date the
    delivery receipt is signed.
   Provides a reasonable time for group holders to deal with end-
    of-month terminations while balancing various stakeholders'
    interests and achieving statutory goals.
     Advance Notice --§21.4003(d)
   Recognizes that in some instances a group holder will
    be able to notify a health carrier that an individual will
    no longer be part of the group eligible for coverage
    prior to the date the individual actually leaves the
    group.

   Allows for termination of premium payment and
    coverage on the date the individual leaves the group if
    the employer provides at least 30 days prior notice.
Successor Coverage -- §21.4003(e)
   Clarifies that a group holder and a health carrier may eliminate
    their premium payment and coverage responsibilities if the
    terminating individual elects to terminate coverage and obtains
    coverage under a successor plan effective before the end of the
    coverage and premium payment period.
   Authorizes a health carrier to require the group holder to verify
    the successor coverage and to agree to be responsible for
    payment of premium if the successor plan fails to cover the
    individual for the relevant period.
   Parties remain responsible for premium payment and coverage if
    the successor plan fails to cover the individual for the relevant
    period.
         Continuation -- §21.4003(f)
   A group holder and carrier are not obligated to
    continue premium payment and coverage under
    coverage a health carrier extends to an individual in
    compliance with:
        29 U.S.C. §1161 et seq. (COBRA);
       TIC Chapter 1251, Subchapter F; or
       Any other federal or state continuation of coverage
        requirement that allows an individual insured or enrollee,
        upon termination of eligibility from a group, to pay premium
        and extend the period of group health benefit plan coverage
        after the individual has left employment or otherwise no
        longer qualifies as a member of the group.
No Contribution -- §21.4003(g)
Clarifies that the obligations to pay premium
and to provide coverage do not apply to plans
under which the group holder does not make
any contribution to the payment of premium for
individuals covered under the plan.
       Demise -- §21.4003(h)
Clarifies that the obligation to pay premium and
to provide coverage ends upon an individual’s
demise or tender of last covered service.
          Awareness & Education
          28 TAC §§3.9301 – 3.9306
   Rule implements SB 261, which added TIC
    Chapter 524.
   Chapter 524 requires TDI to develop a Health
    Coverage Awareness and Education Program to
    disseminate pertinent information about health
    coverage options, including health savings
    accounts and compatible high deductible health
    benefit plans, and authorizes TDI to accept
    donations for this purpose.
                        Bidding
   Rule defines seeking to contract as submitting a bid
    response to the Department.
   Requires an offeree seeking to contract with TDI to
    notify TDI and disclose all donations to any state
    agency within the preceding two years.
   Prohibits an offeree seeking to contract with TDI from
    donating from the date of submitting the bid response
    until the 90th day after the denial of the bid or one year
    after the award of the bid.
   Prohibits a donor from submitting a bid response to
    the Department for a period of one year following the
    execution of the donation agreement.
                             Enforcement
   Establishes limitations for entities subject to TDI regulation.
   Prior to executing the donation agreement, an offeree subject to TDI
    regulation shall notify TDI if the offeree:
        is involved in or is the subject of an open investigation or enforcement action of
         the department or another state agency;
        is applying for a certificate of authority, license, or other department issued
         permit; or
        is seeking a letter of consent pursuant to 18 U.S.C. §1033.
   Sets out notice requirements, including docket number, style, and filing date
    of an enforcement action, if applicable.
   Prohibits an offeree from donating from the date TDI initiates an action,
    case, application, request, investigation, or enforcement action until the 90th
    day after the date of final disposition.
   Clarifies that the required notification does not apply to form filings, data
    calls, or other routine matters.
              Donation Agreement
   Requires the offeree and TDI to execute a donation
    agreement that must include:
       a description of the donation;
       the name and signature of the offeree;
       the purpose of the donation;
       a statement regarding whether disclosures are applicable to
        the offeree and, if so, whether the disclosures have been
        tendered; and
       a statement advising the offeree to seek any desired legal
        and/or tax advice from its own legal counsel.
   Comments by 5:00 p.m., November 13, 2006.
                      SB 155
   This new statute deems a carrier compliant with
    state requirements for any accreditation
    requirement that is the same or more stringent
    than our state requirements.
    The current proposal draft focuses on NCQA
    and URAC.
          Mandatory Benefit Notice
              Requirements
   HB 1485 mandated certain benefits related to the
    detection of human papillomavirus and cervical cancer.
   TDI amended the notice provisions in 28 Texas
    Administrative Code, Subchapter M to implement the
    statutory notice requirement in §1370.004.
   Amendments to §21.2101 expand the scope of the rule
    to include the notice requirements for HPV and
    cervical cancer detection.
   Amended §21.2105 recognizes statutory changes
    permitting electronic distribution of notices and
    addresses requirements relating to delivery of the
    notice.
                 THIRP Notice
             28 TAC §§ 21.2302-21.2306
   SB 809
   Amendment removes the requirement that an
    issuer provide written notice of THIRP
    availability when the issuer offers substantially
    similar health coverage to or for an eligible
    individual who has applied for health coverage
    from the issuer, but at rates higher than the
    issuer’s standard rate.
                           Other Rules
   Preferred Provider
       HB 1030 – Removes 30% differential; adds requirement that coinsurance
        for services from nonpreferred providers may not exceed 50 % of the
        total covered amount.
       HB 2999 -- prohibits denial of preferred provider status to a hospital
        solely because the hospital is not accredited by the JCAHO or another
        specified national accrediting body.
       Requires acceptance of certification or accreditation of a hospital issued
        by the Medicare program, the JCAHO; or any other national accrediting
        body.
       Does not limit an insurer's authority to establish other reasonable terms
        under which a hospital may provide health care services to individuals
        covered by a preferred provider benefit plan.
   Conversion/Continuation
    B-0023-06 – Referring Provider Name
   PPBPs may not require physicians and non-institutional providers who
    submit electronic claims to affirmatively indicate, where applicable, the lack of
    a referring provider in the Professional 837 (ASC X12N 837) claim form.
   This prohibition includes requiring the use of terms such as “self-referral”,
    “none”, or “n/a” to indicate the lack of a referral through companion guides
    or trading partner agreements.
   Federal law, including the implementation guide, holds that the referring
    provider segment of the Professional 837 is a situational requirement,
    imposed only where services are tendered pursuant to a referral. TIC §§
    843.336(b) and 1301.131(a) recognize the cleanliness of claims submitted
    using the Professional 837 format and certain successor formats.
   Accordingly, where there is no referring provider, determining a professional
    electronic claim deficient based upon the lack of this element violates Texas
    law.
          Referring Provider con’t
   A covered entity may thus not enter into a trading
    partner agreement that would change the definition,
    data condition, or use of a data element or segment in a
    standard, or that would add any data elements or
    segments to the maximum defined data set.
   Federal law forbids the required addition of any data
    elements or segments to the maximum defined data set
    even if providers agree to the requirement, as it would
    defeat the purpose of standardization.
               B-0028-06
  Individual Employer Market Coverage
TIC Chapter 1501 governs an individual or group health benefit
  plan if it provides health care benefits covering two or more
  eligible employees of a small employer and
        (1) The employer pays a portion of the premium or
  benefits;
        (2) The employer or a covered individual treats the health
  benefit plan as part of a plan or program for purposes of §§ 106
  or 162 of the IRC; or
        (3) The health benefit plan is an employee welfare benefit
  plan under 29 C.F.R. §2510.3-1(j).

                              TIC §§1501.003 & 1501.004
         Individual Coverage con’t
   Texas insurance law does not constrict an employer’s ability to
    fund employees welfare benefit plans.
   When an issuer offers an individual health benefit plan in
    conjunction with an HRA, cafeteria plan, or other alternative
    arrangement, however, and TIC §1501.002 does not exclude the
    coverage from the scope of TIC Chapter 1501, the individual
    plan is subject to TIC Chapter 1501.
   Accordingly, such arrangements are subject to all group health
    provisions, including guaranteed issuance of coverage for small
    employers and prohibitions against discrimination based on
    health status related factors for all employers.
                     Federal Law
The preamble to the Final Rules on Portability for Group Health
Plans provides that if an employer makes contributions to health
insurance premiums, directly or indirectly, whether the policy is
individual or group or whether the employer is a party to the
insurance contract, the coverage is treated as group health plan
coverage for HIPAA purposes. Separating the employer from
the issuer through an HRA or other alternative plan does not
prevent classification as a group health benefit plan. “…[t]he
employer need not be a party to the insurance policy, or arrange
or pay for it directly, in order for its coverage to be considered
group health benefit plan coverage.”
             Historical Antecedents
   Prior to small group reform in Texas, carriers were not obligated to issue
    coverage to all members of an employer group, which often made persons
    with adverse health risk factors unable to obtain coverage.
   HIPAA and TIC Chapter 1501 were enacted to eliminate this type of health-
    based discrimination and promote broader spreading of risk in the employer
    group market, primarily by vesting small employers and their employees and
    dependents with certain special rights, including the right to uniform
    availability of coverage.
   Issuing health benefit plan coverage on an individual, non-guaranteed issue
    basis to employees of employers will result in the same type of risk-based
    coverage discrimination that HIPAA and Texas law were enacted to
    eliminate.
   Many of the alternative plans the Department has seen, while available to
    employers broadly, do not provide guaranteed issuance at the employee and
    dependent level and thus are not compliant with Texas law.
                         Carrier Action
   Each carrier should review forms, marketing and underwriting
    practices, agent practices, and other procedures, and act immediately
    to correct any non-compliance.
   The best solution is prevention -- include questions on their
    applications for coverage to determine whether premiums will be paid
    or reimbursed through an employee welfare benefit plan, such as an
    HRA or cafeteria plan.
   An unknowing issuer of an individual plan paid or reimbursed by an
    employee welfare benefit plan, may take the following steps:
        Offer the employee or employer an opportunity to modify the program to
         disqualify health benefit plan coverage premiums as an allowable expense;
        Cancel the coverage if the arrangement was not disclosed; or
        Offer to the employer all small or large employer plans, as applicable,
         marketed by the carrier in the geographic service area of the employer.
               Helpful Resources

TDI Website: www.tdi.state.tx.us
Life/Health Division: LifeHealth@tdi.state.tx.us
Texas Health Options Website:
www.TexasHealthOptions.com
TDI Rules: www.tdi.state.tx.us/commish/parules.html
TDI Bulletins: www.tdi.state.tx.us/bulletins/index.html
Texas Legislature’s Website: www.capitol.state.tx.us
My email address: bill.bingham@tdi.state.tx.us
LHL General Management Phone: (512) 305-7342
My phone: (512) 305-7333

								
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