LHL Legislative Implementation 2006 LHL Compliance Conference October 31November 1, 2006

1
LHL Legislative Implementation2006 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_at_tdi.state.tx.us

2
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 individuals status as an
  eligible employee.
• Contribution requirements limit gaming.

3
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.

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Documents cont

• 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.

5
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.

6
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.

7
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.

8
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 rules definition of
  "effective date."

9
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.

10
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.

11
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)

12
Medicare Supplement

• MMA
• Definitions
• Phase out of prescription drug plans
• Minimum benefit standards
• New Plans K L
• Notice requirements

13
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.

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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. 

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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.

16
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.

17
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.

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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)

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Health Group Cooperative asSmall 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)

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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)

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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

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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.

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Definitions

• 21.4002 defines "month" to allow the parties to
  provide by contract the start and end of the
  monthly period.

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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.

25
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. 

26
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.

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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.

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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.

29
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. 

30
Demise -- 21.4003(h)

• Clarifies that the obligation to pay premium and
  to provide coverage ends upon an individuals
  demise or tender of last covered service.

31
Awareness Education28 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. 

32
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.

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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. 

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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 500 p.m., November 13, 2006.

35
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.

36
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. 

37
THIRP Notice28 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 issuers standard rate.
    

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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

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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. 

40
Referring Provider cont

• 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. 

41
B-0028-06Individual 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

42
Individual Coverage cont

• Texas insurance law does not constrict an
  employers 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.

43
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.  the 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.

44
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.      

45
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. 

46
Helpful Resources

• TDI Website www.tdi.state.tx.us
• Life/Health Division LifeHealth_at_tdi.state.tx.us
• Texas Health Options Website www.TexasHealthOptio
  ns.com
• TDI Rules www.tdi.state.tx.us/commish/parules.htm
  l
• TDI Bulletins www.tdi.state.tx.us/bulletins/inde
  x.html
• Texas Legislatures Website www.capitol.state.tx
  .us
• My email address bill.bingham_at_tdi.state.tx.us
• LHL General Management Phone [phone]
• My phone [phone]