HBA-ATS H.B. 1212 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1212 By: Averitt Insurance 3/3/1999 Introduced BACKGROUND AND PURPOSE Chapter 26, Insurance Code, also known as the Health Insurance Portability and Availability Act (Act), regulates the small and large employer insurance market in Texas. The Act applies to health carriers who provide individual or group health benefit plans covering employees of both small and large employers. The Act requires each small employer carrier to provide small employer health benefit plans without regard to health status related factors. A small employer health benefit plan is statutorily defined as a plan developed by the commissioner of insurance (commissioner) or any other health benefit plan offered to a small employer in accordance with Chapter 26. The plans adopted by the commissioner are the catastrophic care benefit plan and the basic coverage benefit plan. These two plans, which are alternatives for employers who are "priced-out" of the health insurance market due to the higher costs of plans that contain all mandated benefits, have significantly fewer mandated benefits than other plans available in the market. No similar provisions for alternative insurance plans developed by the commissioner are available to large employers. H.B. 1212 amends Chapter 26, Insurance Code, by expanding the types of health benefit plans marketed to large employers. This bill requires a large employer carrier to offer the catastrophic care benefit plan and the basic coverage benefit plan developed, by rule, by the commissioner. These plans are not required to contain all the coverage currently offered by the health benefit plans marketed to large employers, but the commissioner is required to establish, by rule, the coverage requirements of these two plans. Additionally, this bill prohibits a large employer carrier from issuing these two plans unless they are written in plain language. The purpose of the plain language requirement is to help consumers understand the extent of the benefits offered by these plans. This bill also authorizes a health maintenance organization to offer these two plans. 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 (Articles 26.82A and 26.82C, Insurance Code) and SECTION 3 (Article 26.91, Insurance Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Article 26.02(16), Insurance Code, to redefine "large employer health benefit plan." SECTION 2. Amends Subchapter H, Chapter 26, Insurance Code, by adding Articles 26.82A, 26.82B, 26.82C, and 26.82D, as follows: ARTICLE 26.82A. LARGE EMPLOYER HEALTH BENEFIT PLANS. (a) Requires a large employer carrier (large carrier) to offer two health benefit plans as adopted by rule by the commissioner of insurance (commissioner). Those two plans are the catastrophic care benefit plan (care plan) and the basic coverage benefit plan (coverage plan). (b) Prohibits a large carrier from offering a rider to these two plans. (c) Sets forth that these two plans are not subject to a law that requires coverage or the offer of coverage of a health care service or benefit, except as expressly provided in Subchapter H (Large Employer Health Benefit Plans) or as required by a federal or state law that expressly refers to these two plans. (d) Authorizes a large carrier also to offer to large employers any other health benefit plan authorized under the Insurance Code, subject to the provisions of Subchapter H. Provides that Subsection (c) does not apply to a health benefit plan offered to a large employer under this subsection. ARTICLE 26.82B. FORMS. (a) Requires the commissioner to promulgate the benefits section of the benefit plan forms in accordance with Article 26.82C. Requires the commissioner to develop prototype policies or evidences of coverage for each of these two plans. Requires a large carrier, for all other portions of these policy or evidence of coverage forms, to comply with Article 3.42 (Policy Form Approval) as it relates to policy form approval and with the Texas Health Maintenance Organization Act (Chapter 20A, Insurance Code) as it relates to approval of an evidence of coverage. Prohibits a large carrier from offering these two plans through a policy form or evidence of coverage that does not comply with Subchapter H. (b) Prohibits a health carrier from issuing and the commissioner from approving a health benefit plan certificate or policy unless it is written in plain language. (c) Provides that each provision of a health benefit plan certificate or policy relating to renewal of coverage, conditions of coverage, or per occurrence or aggregate dollar limitations on coverage must be lucidly explained in plain language. (d) Prohibits a health carrier from using and the commissioner from approving a health benefit plan application form unless it is written in plain language. (e) Provides that Subsections (b)-(d) do not apply if the specific language to be used is mandated by a federal law or state statute or by rules implementing a federal law. (f) Articulates the standard of what constitutes plain language used in a health benefit plan certificate, policy, or application form. (g) Provides that the plain language mandate does not apply to a health benefit plan group master policy or group subscriber contract or to a policy application or enrollment form for a health benefit plan group master policy or group subscriber contract. ARTICLE 26.82C. BENEFIT PLANS. (a) Requires the commissioner, by rule, to establish the coverage requirements for a care plan and a coverage plan. Requires the commissioner to develop prototype policies and evidences of coverage for use by large carriers that include all contractual provisions required to produce an entire contract in accordance with this article and code. (b) Sets forth that coverage under a care plan must be designed to provide necessary coverage in the event of catastrophic illness or injury. Requires the commissioner to establish deductibles and coinsurance requirements at levels that permit options for the enrollee to obtain affordable catastrophic coverage. (c) Sets forth that a basic coverage plan must be designed to provide basic hospital, medical, and surgical coverages. Provides that benefits under the plan are limited to basic care requirements for illness and injury. (d) Sets forth that the benefit provisions of a benefit plan must include all required or applicable definitions; a list of any exclusions or limitations to coverage; a description of covered services required under the plan; and the deductible and coinsurance options that are required or permitted under the plan. ARTICLE 26.82D. HEALTH MAINTENANCE ORGANIZATION PLANS. (a) Authorizes a health maintenance organization (HMO) to offer a state-approved health benefit plan that complies with Subchapter H, the Texas Health Maintenance Organization Act, Title XIII, Public Health Service Act (42 U.S.C. Section 300e et seq.), and its subsequent amendments, and rules adopted under these laws; a plan developed by the commissioner under Article 26.82C; or a point-of-service contract in connection with an insurance carrier that includes optional coverage for out-of-area services, emergency care, or out-of-network care. (b) Provides that a point-of-service contract offered by an insurance carrier is subject to all provisions of Subchapter H unless specifically exempted. Provides that an insurance carrier with which a HMO contracts for a point-of-service contract is not required to otherwise make available the benefit plans adopted under this subchapter if the insurance carrier's large employer products are limited to the point-of-service contract. SECTION 3. Amends Article 26.91, Insurance Code, by amending Subsection (a) and adding Subsection (c), as follows: (a) Requires each large carrier to market a large employer health benefit plan through properly licensed agents to eligible large employers in this state. Requires each large employer purchasing a large employer health benefit plan to be given a summary of the two benefit plans established by the commissioner under this subchapter. Requires the commissioner to prescribe the format of the summary. Requires an agent to offer and explain each of the plans to a large employer when requested by the large employer. Makes a nonsubstantive conforming change. (c) Authorizes the commissioner to adopt rules setting forth additional standards to provide for the fair marketing and broad availability of a large employer health benefit plan to large employers in this state. SECTION 4. Requires the commissioner to develop the benefit plans and to adopt necessary rules by June 1, 2000. Requires a large carrier to offer the benefit plans on January 1, 2001. SECTION 5. Effective date: September 1, 1999. SECTION 6. Emergency clause.