CHAPTER 843. HEALTH MAINTENANCE ORGANIZATIONS

State Codes and Statutes

Statutes > Texas > Insurance-code > Title-6-organization-of-insurers-and-related-entities > Chapter-843-health-maintenance-organizations

INSURANCE CODE

TITLE 6. ORGANIZATION OF INSURERS AND RELATED ENTITIES

SUBTITLE C. LIFE, HEALTH, AND ACCIDENT INSURERS AND RELATED

ENTITIES

CHAPTER 843. HEALTH MAINTENANCE ORGANIZATIONS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 843.001. SHORT TITLE. This chapter may be cited as the

Texas Health Maintenance Organization Act.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Sec. 843.002. DEFINITIONS. In this chapter:

(1) "Adverse determination" means a determination by a health

maintenance organization or a utilization review agent that

health care services provided or proposed to be provided to an

enrollee are not medically necessary or are not appropriate.

(2) "Basic health care services" means health care services that

the commissioner determines an enrolled population might

reasonably need to be maintained in good health.

(3) "Blended contract" means a single document that provides a

combination of indemnity and health maintenance organization

benefits. The term includes a single contract policy,

certificate, or evidence of coverage.

(4) "Capitation" means a method of compensating a physician or

provider for arranging for or providing a defined set of covered

health care services to certain enrollees for a specified period

that is based on a predetermined payment per enrollee for the

specified period, without regard to the quantity of services

actually provided.

(5) "Complainant" means an enrollee, or a physician, provider,

or other person designated to act on behalf of an enrollee, who

files a complaint.

(6) "Complaint" means any dissatisfaction expressed orally or in

writing by a complainant to a health maintenance organization

regarding any aspect of the health maintenance organization's

operation. The term includes dissatisfaction relating to plan

administration, procedures related to review or appeal of an

adverse determination under Section 843.261, the denial,

reduction, or termination of a service for reasons not related to

medical necessity, the manner in which a service is provided, and

a disenrollment decision. The term does not include:

(A) a misunderstanding or a problem of misinformation that is

resolved promptly by clearing up the misunderstanding or

supplying the appropriate information to the satisfaction of the

enrollee; or

(B) a provider's or enrollee's oral or written expression of

dissatisfaction or disagreement with an adverse determination.

(7) "Emergency care" means health care services provided in a

hospital emergency facility, freestanding emergency medical care

facility, or comparable emergency facility to evaluate and

stabilize medical conditions of a recent onset and severity,

including severe pain, that would lead a prudent layperson

possessing an average knowledge of medicine and health to believe

that the individual's condition, sickness, or injury is of such a

nature that failure to get immediate medical care could:

(A) place the individual's health in serious jeopardy;

(B) result in serious impairment to bodily functions;

(D) result in serious disfigurement; or

(E) for a pregnant woman, result in serious jeopardy to the

health of the fetus.

(8) "Enrollee" means an individual who is enrolled in a health

care plan and includes covered dependents.

(9) "Evidence of coverage" means any certificate, agreement, or

contract, including a blended contract, that:

(A) is issued to an enrollee; and

(B) states the coverage to which the enrollee is entitled.

(9-a) "Freestanding emergency medical care facility" means a

facility licensed under Chapter 254, Health and Safety Code.

(10) "Group hospital service corporation" means a corporation

operating under Chapter 842.

(11) "Health care" means prevention, maintenance,

rehabilitation, pharmaceutical, and chiropractic services, other

than medical care, provided by qualified persons.

(12) "Health care plan" means a plan:

(A) under which a person undertakes to provide, arrange for, pay

for, or reimburse any part of the cost of health care services;

and

(B) that consists in part of providing or arranging for health

care services on a prepaid basis through insurance or otherwise,

as distinguished from indemnifying for the cost of health care

services.

(13) "Health care services" means services provided to an

individual to prevent, alleviate, cure, or heal human illness or

injury. The term includes:

(A) pharmaceutical services;

(B) medical, chiropractic, or dental care;

(D) care or services incidental to the health care services

described by Paragraphs (A)-(C); and

(E) services provided under a limited health care service plan

or a single health care service plan.

(14) "Health maintenance organization" means a person who

arranges for or provides to enrollees on a prepaid basis a health

care plan, a limited health care service plan, or a single health

care service plan.

(15) "Health maintenance organization delivery network" means a

health care delivery system in which a health maintenance

organization arranges for health care services directly or

indirectly through contracts and subcontracts with physicians and

providers.

(16) "Life-threatening" means a disease or condition from which

the likelihood of death is probable unless the course of the

disease or condition is interrupted.

(17) "Limited health care service plan" means a plan:

(A) under which a person undertakes to provide, arrange for, pay

for, or reimburse any part of the cost of limited health care

services; and

(B) that consists in part of providing or arranging for limited

health care services on a prepaid basis through insurance or

otherwise, as distinguished from indemnifying for the cost of

limited health care services.

(18) "Limited health care services" means:

(A) services for mental health, chemical dependency, or mental

retardation, or any combination of those services; or

(B) an organized long-term care service delivery system that

provides for diagnostic, preventive, therapeutic, rehabilitative,

and personal care services required by an individual with a loss

in functional capacity on a long-term basis.

(19) "Medical care" means the provision of those services

defined as practicing medicine under Section 151.002, Occupations

Code.

(20) "Net worth" means the amount by which total liabilities,

excluding liability for subordinated debt issued in compliance

with Chapter 427, is exceeded by total admitted assets.

(21) "Person" means any natural or artificial person, including

an individual, partnership, association, corporation,

organization, trust, hospital district, community mental health

center, mental retardation center, mental health and mental

retardation center, limited liability company, or limited

liability partnership or the statewide rural health care system

under Chapter 845.

(22) "Physician" means:

(A) an individual licensed to practice medicine in this state;

(B) a professional association organized under the Texas

Professional Association Act (Article 1528f, Vernon's Texas Civil

Statutes);

Chapter 162, Occupations Code;

(D) a medical school or medical and dental unit, as defined or

described by Section 61.003, 61.501, or 74.601, Education Code,

that employs or contracts with physicians to teach or provide

medical services or employs physicians and contracts with

physicians in a practice plan; or

(E) another person wholly owned by physicians.

(23) "Prospective enrollee" means:

(A) an individual eligible to enroll in a health maintenance

organization purchased through a group of which the individual is

a member; or

(B) for an individual who is not a member of a group or whose

group has not purchased or does not intend to purchase a health

maintenance organization's health care plan, an individual who

has expressed an interest in purchasing individual health

maintenance organization coverage and is eligible for coverage by

a health maintenance organization.

(24) "Provider" means:

(A) a person, other than a physician, who is licensed or

otherwise authorized to provide a health care service in this

state, including:

(i) a chiropractor, registered nurse, pharmacist, optometrist,

registered optician, or acupuncturist; or

(ii) a pharmacy, hospital, or other institution or organization;

(B) a person who is wholly owned or controlled by a provider or

by a group of providers who are licensed or otherwise authorized

to provide the same health care service; or

hospitals and physicians, including a physician-hospital

organization.

(25) "Single health care service" means a health care service:

(A) that an enrolled population may reasonably need to be

maintained in good health with respect to a particular health

care need to prevent, alleviate, cure, or heal human illness or

injury of a single specified nature; and

(B) that is provided by one or more persons licensed or

otherwise authorized by the state to provide that service.

(26) "Single health care service plan" means a plan:

(A) under which a person undertakes to provide, arrange for, pay

for, or reimburse any part of the cost of a single health care

service;

(B) that consists in part of providing or arranging for the

single health care service on a prepaid basis through insurance

or otherwise, as distinguished from indemnifying for the cost of

that service; and

than one health care need of a single specified nature.

(27) "Sponsoring organization" means a person who guarantees the

uncovered expenses of a health maintenance organization and who

is financially capable, as determined by the commissioner, of

meeting the obligations resulting from that guarantee.

(28) "Uncovered expenses" means the estimated amount of

administrative expenses and the estimated cost of health care

services that are not guaranteed, insured, or assumed by a person

other than the health maintenance organization. The term does

not include the cost of health care services if the physician or

provider agrees in writing that an enrollee is not liable,

assessable, or in any way subject to making payment for the

services except as described in the evidence of coverage issued

to the enrollee under Chapter 1271. The term includes any amount

due on loans in the next calendar year unless the amount is

specifically subordinated to uncovered medical and health care

expenses or the amount is guaranteed by a sponsoring

organization.

(29) "Uncovered liabilities" means obligations resulting from

unpaid uncovered expenses, the outstanding indebtedness of loans

that are not specifically subordinated to uncovered medical and

health care expenses or guaranteed by the sponsoring

organization, and all other monetary obligations that are not

similarly subordinated or guaranteed.

(30) "Delegated entity" means an entity, other than a health

maintenance organization authorized to engage in business under

this chapter, that by itself, or through subcontracts with one or

more entities, undertakes to arrange for or provide medical care

or health care to an enrollee in exchange for a predetermined

payment on a prospective basis and that accepts responsibility

for performing on behalf of the health maintenance organization a

function regulated by this chapter, Section 1367.053, Subchapter

A, Chapter 1452, Subchapter B, Chapter 1507, Chapter 222, 251, or

258, as applicable to a health maintenance organization, or

Chapter 1271 or 1272. The term does not include:

(A) an individual physician; or

(B) a group of employed physicians, practicing medicine under

one federal tax identification number, whose total claims paid to

providers not employed by the group constitute less than 20

percent of the group's total collected revenue computed on a

calendar year basis.

(31) "Limited provider network" means a subnetwork within a

health maintenance organization delivery network in which

contractual relationships exist between physicians, certain

providers, independent physician associations, or physician

groups that limits an enrollee's access to physicians and

providers to those physicians and providers in the subnetwork.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003. Amended by Acts 2003, 78th Leg., ch. 1179, Sec. 8, eff.

Sept. 1, 2003; Acts 2003, 78th Leg., ch. 1276, Sec. 10A.205(a),

10A.206, eff. Sept. 1, 2003.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 2E.029, eff. April 1, 2009.

Acts 2009, 81st Leg., R.S., Ch.

1273, Sec. 2, eff. March 1, 2010.

Sec. 843.003. POWERS OF INSURERS AND GROUP HOSPITAL SERVICE

CORPORATIONS. (a) An insurer authorized to engage in the

business of insurance in this state under Chapter 822, 841, or

883, an accident insurance company, health insurance company, or

life insurance company authorized to engage in the business of

insurance in this state under Chapter 982, or a group hospital

service corporation may, either directly or through a subsidiary

or affiliate, organize and operate a health maintenance

organization under this chapter.

(b) Any two or more insurers or group hospital service

corporations described by Subsection (a), or their subsidiaries

or affiliates, may jointly organize and operate a health

maintenance organization under this chapter.

contract with a health maintenance organization to provide:

(1) insurance or similar protection against the cost of care

provided by the health maintenance organization; and

(2) coverage if the health maintenance organization does not

meet its obligations.

(d) The authority of an insurer or group hospital service

corporation under a contract described by Subsection (c) may

include the authority to make benefit payments to a health

maintenance organization for health care services provided by

physicians or providers under a health care plan.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Sec. 843.004. GOVERNING BODY OF HEALTH MAINTENANCE ORGANIZATION.

The governing body of a health maintenance organization may

include physicians, providers, or other individuals, or any

combination of physicians, providers, and other individuals.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Sec. 843.005. USE OF INSURANCE-RELATED TERMS BY HEALTH

MAINTENANCE ORGANIZATION. A health maintenance organization that

is not authorized as an insurer may not use in its name,

contracts, or literature the word "insurance," "casualty,"

"surety," or "mutual," or any other words that are:

(1) descriptive of the insurance, casualty, or surety business;

(2) deceptively similar to the name or description of an insurer

or surety corporation engaging in business in this state.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Sec. 843.006. PUBLIC DOCUMENTS. (a) Except as provided by

Subsection (b), each application, filing, and report required

under this chapter, Section 1367.053, Subchapter A, Chapter 1452,

Subchapter B, Chapter 1507, Chapter 222, 251, or 258, as

applicable to a health maintenance organization, or Chapter 1271

or 1272 is a public document.

(b) An examination report is confidential but may be released

if, in the opinion of the commissioner, the release is in the

public interest.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 2E.030, eff. April 1, 2009.

Sec. 843.007. CONFIDENTIALITY OF MEDICAL AND HEALTH INFORMATION.

(a) Any information relating to the diagnosis, treatment, or

health of an enrollee or applicant obtained by a health

maintenance organization from the enrollee or applicant or from a

physician or provider shall be held in confidence and may not be

disclosed to any person except:

(1) to the extent necessary to accomplish the purposes of this

chapter or:

(A) Section 1367.053;

(B) Subchapter A, Chapter 1452;

(D) Chapter 222, 251, or 258, as applicable to a health

maintenance organization; or

(E) Chapter 1271 or 1272;

(2) with the express consent of the enrollee or applicant;

(3) in compliance with a statute or court order for the

production or discovery of evidence; or

(4) in the event of a claim or litigation between the enrollee

or applicant and the health maintenance organization in which the

information is pertinent.

(b) A health maintenance organization is entitled to claim the

statutory privilege against disclosure that the physician or

provider who provides the information to the health maintenance

organization is entitled to claim.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 2E.031, eff. April 1, 2009.

Sec. 843.008. COSTS OF ADMINISTERING HEALTH MAINTENANCE

ORGANIZATION LAWS. Money collected under this chapter and

Chapters 222, 251, and 258, as applicable to a health maintenance

organization, must be sufficient to administer this chapter and:

(1) Section 1367.053;

(2) Subchapter A, Chapter 1452;

(3) Subchapter B, Chapter 1507;

(4) Chapters 222, 251, and 258, as applicable to a health

maintenance organization; and

(5) Chapters 1271 and 1272.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 2E.032, eff. April 1, 2009.

Sec. 843.009. APPEALS; JUDICIAL REVIEW. (a) A person who is

affected by a rule, ruling, or decision of the department or the

commissioner is entitled to have the rule, ruling, or decision

reviewed by the commissioner by applying to the commissioner.

(b) An application must identify:

(1) the applicant;

(2) the rule, ruling, or decision affecting the applicant;

(3) the interest of the applicant in the rule, ruling, or

decision;

(4) the grounds of the applicant's objection;

(5) the action sought of the commissioner; and

(6) the reasons and grounds for the commissioner to take the

action.

chief clerk of the department with a certification that a true

and correct copy of the application has been filed with the

commissioner.

(d) Not later than the 30th day after the date the application

is filed, and after 10 days' written notice to each party of

record, the commissioner shall review the action in a hearing. In

the hearing, any evidence and any matter pertinent to the

application may be submitted to the commissioner regardless of

whether it was included in the application.

(e) After the hearing, the commissioner shall render a decision

at the earliest possible date. The application has precedence

over all other business of a different nature pending before the

commissioner.

(f) The commissioner shall adopt rules, consistent with this

section, relating to applications under this section and

consideration of those applications that the commissioner

considers advisable.

(g) A person who is affected by a rule, ruling, or decision of

the commissioner and is dissatisfied with the rule, ruling, or

decision may, after failing to get relief from the commissioner,

file a petition seeking judicial review of the rule, ruling, or

decision under Subchapter D, Chapter 36. The action has

precedence over all other causes on the docket of a different

nature.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

SUBCHAPTER B. APPLICABILITY OF AND CONSTRUCTION WITH OTHER LAWS

Sec. 843.051. APPLICABILITY OF INSURANCE AND GROUP HOSPITAL

SERVICE CORPORATION LAWS. (a) Except to the extent that the

commissioner determines that the nature of health maintenance

organizations, health care plans, or evidences of coverage

renders a provision of the following laws clearly inappropriate,

Subchapter A, Chapter 542, Subchapters D and E, Chapter 544, and

Chapters 541, 543, and 547 apply to:

(1) health maintenance organizations that offer basic, limited,

and single health care coverages;

(2) basic, limited, and single health care plans; and

(3) evidences of coverage under basic, limited, and single

health care plans.

(b) A health maintenance organization is subject to:

(1) Chapter 402;

(2) Chapter 827 and is an authorized insurer for purposes of

that chapter; and

(3) Subchapter G, Chapter 1251, and Section 1551.064.

insurance laws and group hospital service corporation laws do not

apply to a health maintenance organization that holds a

certificate of authority under this chapter. This subsection

applies to an insurer or a group hospital service corporation

only with respect to the health maintenance organization

activities of the insurer or corporation.

(d) Activities permitted under other chapters of this code are

not subject to this chapter.

(e) Except for Chapter 251, as applicable to a third-party

administrator, and Chapters 259, 4151, and 4201, insurance laws

and group hospital service corporation laws do not apply to a

physician or provider. Notwithstanding this subsection, a

physician or provider who conducts a utilization review during

the ordinary course of treatment of patients under a joint or

delegated review agreement with a health maintenance organization

on services provided by the physician or provider is not required

to obtain certification under Subchapter C, Chapter 4201.

(f) A health maintenance organization is subject to Chapter 823

as if the health maintenance organization were an insurer under

that chapter.

(g) The merger of a health maintenance organization with another

health maintenance organization is subject to Chapter 824 as if

the health maintenance organizations were insurance corporations

under that chapter. The commissioner may adopt rules as

necessary to implement this subsection in a way that reflects the

nature of health maintenance organizations, health care plans, or

evidences of coverage.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Amended by:

Acts 2005, 79th Leg., Ch.

364, Sec. 1, eff. September 1, 2005.

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 2E.033, eff. April 1, 2009.

Sec. 843.052. LAWS RELATING TO SOLICITATION OR ADVERTISING. (a)

Solicitation of enrollees by a health maintenance organization

or its representative or agent does not violate a law relating to

solicitation or advertising by a physician or provider.

(b) The provision of factually accurate information by a health

maintenance organization or its personnel to prospective

enrollees regarding coverage, rates, location and hours of

service, and names of affiliated institutions, physicians, and

providers does not violate any law relating to solicitation or

advertising by a physician or provider. The provision of that

information with respect to a physician or provider may not be

contrary to or in conflict with any law or ethical provision

regulating the practice of a practitioner of any professional

service provided through or in connection with the physician or

provider.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Sec. 843.053. LAWS RELATING TO RESTRAINT OF TRADE. (a) A

health maintenance organization that contracts with a health

facility or enters into an independent contractual arrangement

with physicians or providers practicing individually or as a

group is not, because of the contract or arrangement, considered

to have entered into a conspiracy in restraint of trade in

violation of Sections 15.01-15.26, Business & Commerce Code.

(b) Notwithstanding any other law, a physician who contracts

with one or more physicians in the process of conducting

activities that are permitted by law but that do not require a

certificate of authority under this chapter is not, because of

the contract, considered to have entered into a conspiracy in

restraint of trade in violation of Sections 15.01-15.26, Business

& Commerce Code.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Sec. 843.054. LAWS REQUIRING CERTIFICATE OF NEED FOR HEALTH CARE

FACILITY OR SERVICE. (a) A health maintenance organization is

not exempt from any statute that provides for the regulation and

certification of need of health care facility construction,

expansion, or other modification, or the institution of a health

care service through the issuance of a certificate of need, if at

the time of establishment of operation or during the course of

operation of the health maintenance organization it becomes

subject to the provisions of that statute.

(b) If the proposed plan of operation of a health maintenance

organization includes providing a health care facility or service

that makes the health maintenance organization subject to a

statute described by Subsection (a), the commissioner may not

issue a certificate of authority until the commissioner has

received a certified copy of the certificate of need granted to

the health maintenance organization by the appropriate agency.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Sec. 843.055. LAWS RELATING TO PRACTICE OF MEDICINE. (a) This

chapter does not authorize the practice of medicine as defined by

state law.

(b) This chapter does not repeal, modify, or amend Section

164.051, 164.052, 164.053, 164.054, or 164.056, Occupations Code,

and a health maintenance organization is not exempt from those

sections.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Sec. 843.056. INAPPLICABILITY OF BANKRUPTCY LAW. By applying

for and receiving a certificate of authority to engage in

business in this state, a health maintenance organization agrees

and admits that it is not subject to and is not eligible to

proceed under the United States Bankruptcy Code.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

SUBCHAPTER C. AUTHORITY TO ENGAGE IN BUSINESS

Sec. 843.071. CERTIFICATE OF AUTHORITY REQUIRED; USE OF "HEALTH

MAINTENANCE ORGANIZATION" OR "HMO". (a) A person may not

organize or operate a health maintenance organization in this

state, or sell or offer to sell or solicit offers to purchase or

receive advance or periodic consideration in conjunction with a

health maintenance organization, without obtaining a certificate

of authority under this chapter.

(b) A person may not use "health maintenance organization" or

"HMO" in the course of operation unless the person:

(1) complies with this chapter and:

(A) Section 1367.053;

(B) Subchapter A, Chapter 1452;

(D) Chapters 222, 251, and 258, as applicable to a health

maintenance organization; and

(E) Chapters 1271 and 1272; and

(2) holds a certificate of authority under this chapter.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 2E.034, eff. April 1, 2009.

Sec. 843.072. AUTHORIZATION REQUIRED TO ACT AS HEALTH

MAINTENANCE ORGANIZATION. (a) A person, including a physician

or provider, may not perform any act of a health maintenance

organization except in accordance with the specific authorization

of this chapter or other law.

(b) A person, including a physician or provider, who performs an

act of a health maintenance organization that requires a

certificate of authority under this chapter without first

obtaining the certificate is subject to all enforcement processes

and procedures available against an unauthorized insurer under

Chapter 101 and Subchapter C, Chapter 36.

regulation under Section 843.051(e), 843.053, 843.073, or

843.318.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Sec. 843.073. CERTIFICATE OF AUTHORITY REQUIREMENT:

APPLICABILITY TO PHYSICIANS AND PROVIDERS. (a) A person is not

required to obtain a certificate of authority under this chapter

to the extent that the person is:

(1) a physician engaged in the delivery of medical care; or

(2) a provider engaged in the delivery of health care services

other than medical care as part of a health maintenance

organization delivery network.

(b) Except as provided by Section 843.101 or 843.318(a), a

physician or provider that employs or enters into a contractual

arrangement with a provider or group of providers to provide

basic or limited health care services or a single health care

service is subject to this chapter and the following provisions

and is required to obtain a certificate of authority under this

chapter:

(1) Section 1367.053;

(2) Subchapter A, Chapter 1452;

(3) Subchapter B, Chapter 1507;

(4) Chapters 222, 251, and 258, as applicable to a health

maintenance organization; and

(5) Chapters 1271 and 1272.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 2E.035, eff. April 1, 2009.

Sec. 843.074. CERTIFICATE OF AUTHORITY REQUIREMENT:

APPLICABILITY TO MEDICAL SCHOOL AND MEDICAL AND DENTAL UNIT. A

medical school or medical and dental unit, as defined or

described by Section 61.003, 61.501, or 74.601, Education Code,

is not required to obtain a certificate of authority under this

chapter to the extent that the medical school or medical and

dental unit contracts to deliver medical care within a health

maintenance organization delivery network. This chapter is

otherwise applicable to the medical school or medical and dental

unit.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Sec. 843.075. CERTIFICATE OF AUTHORITY FOR SINGLE HEALTH CARE

SERVICE PLAN. The commissioner may issue a certificate of

authority to a health maintenance organization organized and

operated solely to provide a single health care service plan.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Sec. 843.076. APPLICATION. (a) Any person may apply to the

commissioner for and obtain a certificate of authority to

organize and operate a health maintenance organization.

(b) An application for a certificate of authority must:

(1) be on a form prescribed by rules adopted by the

commissioner; and

(2) be verified by the applicant or an officer or other

authorized representative of the applicant.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Sec. 843.077. ELIGIBILITY OF FOREIGN CORPORATION. A foreign

corporation may qualify for a certificate of authority under this

chapter, including a certificate of authority for a single health

care service plan, subject to the corporation's:

(1) registration to engage in business in this state as a

foreign corporation under the Texas Business Corporation Act; and

(2) compliance with this chapter and other applicable state

laws.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Sec. 843.078. CONTENTS OF APPLICATION. (a) An application for

a certificate of authority must include:

(1) a copy of the applicant's basic organizational document, if

any, such as the articles of incorporation, articles of

association, partnership agreement, trust agreement, or other

applicable documents;

(2) all amendments to the applicant's basic organizational

document; and

(3) a copy of the bylaws, rules and regulations, or similar

documents, if any, regulating the conduct of the applicant's

internal affairs.

(b) An application for a certificate of authority must include a

list of the names, addresses, and official positions of the

persons responsible for the conduct of the applicant's affairs,

including:

(1) each member of the board of directors, board of trustees,

executive committee, or other governing body or committee;

(2) the principal officer, if the applicant is a corporation;

and

(3) each partner or member, if the applicant is a partnership or

association.

copy of any independent contract or other contract made or to be

made between the applicant and any physician, provider, or person

listed under Subsection (b).

(d) An application for a certificate of authority must include:

(1) a copy of the form of evidence of coverage to be issued to

an enrollee;

(2) a copy of the form of the group contract, if any, to be

issued to an employer, union, trustee, or other organization; and

(3) a written description of health care plan terms made

available to any current or prospective group contract holder or

current or prospective enrollee of the health maintenance

organization in accordance with Section 843.201.

(e) An application for a certificate of authority must include a

financial statement that is current on the date of the

application and that includes:

(1) the sources and application of funds;

(2) projected financial statements during the initial period of

operations;

(3) a balance sheet reflecting the condition of the applicant on

the date operations are expected to start;

(4) a statement of revenue and expenses with expected member

months; and

(5) a cash flow statement that states any capital expenditures,

purchase and sale of investments, and deposits with the state.

(f) An application for a certificate of authority must include

the schedule of charges to be used during the first 12 months of

operation.

(g) An application for a certificate of authority must include a

statement acknowledging that lawful process in a legal action or

proceeding against the health maintenance organization on a cause

of action arising in this state is valid if served in accordance

with Chapter 804.

(h) An application for a certificate of authority must include a

statement reasonably describing the service area or areas to be

served by the applicant.

(i) An application for a certificate of authority must include a

description of the complaint procedures the applicant will use.

(j) An application for a certificate of authority must include a

description of the procedures and programs to be implemented by

the applicant to meet the quality of health care requirements of

this chapter and:

(1) Section 1367.053;

(2) Subchapter A, Chapter 1452;

(3) Subchapter B, Chapter 1507; and

(4) Chapters 1271 and 1272.

(k) An application for a certificate of authority must include

network configuration information, including an explanation of

the adequacy of the physician and other provider network

configuration. The information provided must:

(1) include the names of physicians, specialty physicians, and

other providers by zip code or zip code map; and

(2) indicate whether each physician or other provider is

accepting new patients from the health maintenance organization.

(l) An application for a certificate of authority must include a

written description of the types of compensation arrangements,

such as compensation based on fee-for-service arrangements,

risk-sharing arrangements, or capitated risk arrangements, made

or to be made with physicians and providers in exchange for the

provision of or an arrangement to provide health care services to

enrollees, including any financial incentives for physicians and

providers. The compensation arrangements are confidential and are

not subject to the public information law, Chapter 552,

Government Code.

(m) An application for a certificate of authority must include

documentation demonstrating that the applicant will comply with

Section 1271.005(c).

(n) An application for a certificate of authority must include

any other information that the commissioner requires to make the

determinations required by this chapter and:

(1) Section 1367.053;

(2) Subchapter A, Chapter 1452;

(3) Subchapter B, Chapter 1507;

(4) Chapters 222, 251, and 258, as applicable to a health

maintenance organization; and

(5) Chapters 1271 and 1272.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 2E.036, eff. April 1, 2009.

Sec. 843.079. CONTENTS OF APPLICATION: LIMITED HEALTH CARE

SERVICE PLAN. In addition to the items required under Section

843.078, an application for a certificate of authority for a

limited health care service plan must include a specific

description of the health care services to be provided by the

applicant.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Sec. 843.080. MODIFICATION OR AMENDMENT OF APPLICATION

INFORMATION. (a) The commissioner may adopt reasonable rules

that the commissioner considers necessary for the proper

administration of this chapter to require a health maintenance

organization, after receiving its certificate of authority, to

submit modifications or amendments to the operations or documents

described in Sections 843.078 and 843.079 to the commissioner,

for the commissioner's approval or only to provide information,

before implementing the modification or amendment or to require

the health maintenance organization to indicate the modifications

to the commissioner at the time of the next site visit or

examination.

(b) As soon as reasonably possible after any filing for approval

required under this section is made, the commissioner shall

approve or disapprove the filing in writing. If, before the 31st

day after the date a modification or amendment for which the

commissioner's approval is required is filed, the commissioner

does not disapprove the modification or amendment, it is

considered approved. The commissioner may delay action as

necessary for proper consideration for not more than an

additional 30 days.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Sec. 843.082. REQUIREMENTS FOR APPROVAL OF APPLICATION. The

commissioner shall issue a certificate of authority on payment of

the application fee prescribed by Section 843.154(c) if the

commissioner is satisfied that:

(1) with respect to health care services to be provided, the

applicant:

(A) has demonstrated the willingness and potential ability to

ensure that the health care services will be provided in a manner

to:

(i) ensure both availability and accessibility of adequate

personnel and facilities; and

(ii) enhance availability, accessibility, quality of care, and

continuity of services;

(B) has arrangements, established in accordance with rules

adopted by the commissioner, for a continuing quality of health

care assurance program concerning health care processes and

outcomes; and

the commissioner, to develop, compile, evaluate, and report

statistics relating to the cost of operation, the pattern of

utilization of services, and availability and accessibility of

services;

(2) the person responsible for the conduct of the affairs of the

applicant is competent, is trustworthy, and has a good

reputation;

(3) the health care plan, limited health care service plan, or

single health care service plan is an appropriate mechanism

through which the health maintenance organization will

effectively provide or arrange for the provision of basic health

care services, limited health care services, or a single health

care service on a prepaid basis, through insurance or otherwise,

except to the extent of reasonable requirements for copayments;

(4) the health maintenance organization is fully responsible and

may reasonably be expected to meet its obligations to enrollees

and prospective enrollees, after considering:

(A) the financial soundness of the health care plan's

arrangement for health care services and the schedule of charges

used in connection with the arrangement;

(B) the adequacy of working capital;

corporation, a political subdivision of government, or any other

organization for insuring the payment of the cost of health care

services or providing for automatic applicability of an

alternative coverage in the event the plan is discontinued;

(D) any agreement that provides for the provision of health care

services; and

(E) any deposit of cash or securities submitted in accordance

with Section 843.405 as a guarantee that the obligations will be

performed; and

(5) the proposed plan of operation, as shown by the information

submitted under Section 843.078 and, if applicable, Section

843.079, or by independent investigation, does not violate state

law.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Sec. 843.083. DENIAL OF CERTIFICATE OF AUTHORITY. (a) If the

commissioner certifies that the health maintenance organization's

proposed plan of operation does not meet the requirements of

Section 843.082, the commissioner may not issue a certificate of

authority.

(b) The commissioner shall notify the applicant that the plan is

deficient and specify the deficiencies.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Sec. 843.084. DURATION OF CERTIFICATE OF AUTHORITY. A

certificate of authority continues in effect:

(1) while the certificate holder meets the requirements of this

chapter and:

(A) Section 1367.053;

(B) Subchapter A, Chapter 1452;

(D) Chapters 222, 251, and 258, as applicable to a health

maintenance organization; and

(E) Chapters 1271 and 1272; or

(2) until the commissioner suspends or revokes the certificate

or the commissioner terminates the certificate at the request of

the certificate holder.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 2E.037, eff. April 1, 2009.

Sec. 843.085. CHANGE IN CONTROL: COMMISSIONER APPROVAL. Any

change in control, as defined by Chapter 823, of a health

maintenance organization is subject to the approval of the

commissioner.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

SUBCHAPTER D. GENERAL POWERS AND DUTIES OF HEALTH MAINTENANCE

ORGANIZATIONS

Sec. 843.101. PROVIDING OR ARRANGING FOR CARE. (a) A health

maintenance organization may provide or arrange for medical care

services only through:

(1) other health maintenance organizations; or

(2) physicians or groups of physicians who have independent

contracts with the health maintenance organizations.

(b) A health maintenance organization may provide or arrange for

health care services only through:

(1) other health maintenance organizations;

(2) providers or groups of providers who are under contract with

or are employed by the health maintenance organization; or

(3) additional health maintenance organizations or physicians or

providers who have contracted for health care services with:

(A) the other health maintenance organizations;

(B) physicians with whom the health maintenance organization has

contracted; or

health maintenance organization.

maintenance organization may provide or authorize the following

in a manner approved by the commissioner:

(1) emergency care;

(2) services by referral; and

(3) services provided outside the service area.

(d) A health maintenance organization may not employ or contract

with other health maintenance organizations or physicians or

providers in a manner that is prohibited by a law of this state

under which those health maintenance organizations or physicians

or providers are licensed or otherwise authorized.

(e) A health maintenance organization may serve as a workers'

compensation health care network, as defined by Section 1305.004,

in accordance with Chapter 1305.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 6.060, eff. September 1, 2005.

Sec. 843.102. HEALTH MAINTENANCE ORGANIZATION QUALITY ASSURANCE.

(a) A health maintenance organization shall establish

procedures to ensure that health care services are provided to

enrollees under reasonable standards of quality of care that are

consistent with prevailing professionally recognized standards of

medical practice. The procedures must include mechanisms to

ensure availability, accessibility, quality, and continuity of

care.

(b) A health maintenance organization shall operate a continuing

internal quality assurance program to monitor and evaluate its

health care services, including primary and specialist physician

services and ancillary and preventive health care services, in

all institutional and noninstitutional settings.

requirements for the quality assurance programs, including

standards for ensuring availability, accessibility, quality, and

continuity of care.

(d) A health maintenance organization shall record formal

proceedings of quality assurance program activities and maintain

documentation in a confidential manner. The health maintenance

organization shall make the quality assurance program minutes

available to the commissioner.

(e) A health maintenance organization shall establish and

maintain a physician review panel to assist in:

(1) reviewing medical guidelines or criteria; and

(2) determining prescription drugs to be covered by the health

maintenance organization, if the health maintenance organization

offers a prescription drug benefit.

(f) A health maintenance organization shall ensure the use and

maintenance of an adequate patient record system to facilitate

documentation and retrieval of clinical information for the

health maintenance organization's evaluation of continuity and

coordination of patient care and assessment of the quality of

health and medical care provided to enrollees.

(g) The clinical records of enrollees shall be available to the

commissioner for examination and review to determine compliance.

The records are confidential and privileged and are not subject

to the public information law, Chapter 552, Government Code, or

to subpoena, except to the extent necessary to enable the

commissioner to enforce this section.

(h) A health maintenance organization shall establish a

mechanism for the periodic reporting of quality assurance program

activities to its governing body, providers, and appropriate

health maintenance organization staff.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Sec. 843.103. ACQUISITION AND OPERATION OF FACILITIES; CERTAIN

LOANS; COMMISSIONER APPROVAL OF AFFILIATE TRANSACTIONS. (a) A

health maintenance organization may:

(1) purchase, lease, construct, renovate, operate, or maintain

hospitals or medical facilities and ancillary equipment and other

property reasonably required for the principal office of the

health maintenance organization or for another purpose necessary

in engaging in the business of the health maintenance

organization; and

(2) make loans to a medical group, under an independent contract

with the group to further its program, or corporations under its

control, to acquire or construct medical facilities and

hospitals, or to further a program providing health care services

to enrollees.

(b) If the exercise of a power granted under Subsection (a)

involves an affiliate, as described by Section 823.003, the

health maintenance organization before exercising that power

shall file notice and adequate supporting information with the

commissioner for approval.

described by Subsection (a) that would in the commissioner's

opinion:

(1) substantially and adversely affect the financial soundness

of the health maintenance organization and endanger its ability

to meet its obligations; or

(2) impair the interests of the public or the health maintenance

organization's enrollees or creditors in this state.

(d) If the commissioner does not disapprove the exercise of a

power described by Subsection (a) before the 31st day after the

date notice is filed under this section, the exercise of the

power is considered approved. The commissioner may, by official

order, delay action as necessary for proper consideration for not

more than an additional 30 days.

(e) The commissioner may adopt rules exempting from the filing

requirements of Subsection (b) an activity that has a de minimis

effect.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Sec. 843.104. CONTRACTS FOR CERTAIN ADMINISTRATIVE FUNCTIONS. A

health maintenance organization may contract with any person to

perform functions such as marketing, enrollment, and

administration on behalf of the health maintenance organization.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Sec. 843.105. MANAGEMENT AND EXCLUSIVE AGENCY CONTRACTS. (a) A

health maintenance organization may not enter into a management

contract or exclusive agency contract unless the proposed

contract is first filed with and approved by the commissioner.

(b) The commissioner must approve or disapprove the contract not

later than the 30th day after the date the contract is filed or

within a reasonable extended period that the commissioner

specifies by notice given within the 30-day period.

the commissioner determines that the contract:

(1) subjects the health maintenance organization to excessive

charges;

(2) extends for an unreasonable time;

(3) does not contain fair and adequate standards of performance;

(4) authorizes persons to manage the health maintenance

organization who are not sufficiently trustworthy, competent,

experienced, and free from conflict of interest to manage the

health maintenance organization with due regard for the interests

of the health maintenance organization's enrollees or creditors

or the public; or

(5) contains provisions that impair the interests of the public

in this state or the health maintenance organization's enrollees

or creditors.

(d) The commissioner shall disapprove a proposed management

contract unless the commissioner determines that the management

contractor has in force in its own name a fidelity bond on its

officers and employees in the amount of at least $100,000 or

another amount prescribed by the commissioner.

(e) The fidelity bond must be issued by an insurer that holds a

certificate of authority in this state. If, after notice and

hearing, the commissioner determines that a fidelity bond is not

available from an insurer that holds a certificate of authority

in this state, the management contractor may obtain a fidelity

bond procured by a surplus lines agent resident in this state in

compliance with Chapter 981.

(f) The fidelity bond must obligate the surety to pay any loss

of money or other property that the health maintenance

organization sustains because of an act of fraud or dishonesty by

an employee or officer of the management contractor during the

period that the management contract is in effect.

(g) Instead of a fidelity bond, the management contractor may

deposit with the comptroller cash or securities acceptable to the

commissioner. The deposit must be maintained in the amount and is

subject to the same conditions required for a fidelity bond under

this section.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Sec. 843.106. INSURANCE, REINSURANCE, INDEMNITY, AND

REIMBURSEMENT. A health maintenance organization may contract

with an insurer or group hospital service corporation authorized

to engage in business in this state to provide insurance,

reinsurance, indemnification, or reimbursement against the cost

of health care and medical care services provided by the health

maintenance organization.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Sec. 843.107. INDEMNITY BENEFITS; POINT-OF-SERVICE PROVISIONS.

A health maintenance organization may offer:

(1) indemnity benefits covering out-of-area emergency care;

(2) indemnity benefits, in addition to those relating to

out-of-area and emergency care, provided through an insurer or

group hospital service corporation;

(3) a point-of-service plan under Subchapter A, Chapter 1273; or

(4) a point-of-service rider under Section 843.108.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 2E.038, eff. April 1, 2009.

Sec. 843.108. POINT-OF-SERVICE RIDER. (a) In this section,

"point-of-service rider" means a rider under which indemnity

benefits for the cost of health care services are provided by a

health maintenance organization in conjunction with corresponding

benefits arranged for or provided by a health maintenance

organization.

(b) A health maintenance organization may offer a

point-of-service rider for out-of-network coverage without

obtaining a separate certificate of authority as an insurer if

the expenses incurred under the point-of-service rider do not

exceed 10 percent of the total medical and hospital expenses

incurred for all health plan products sold by the health

maintenance organization. If the expenses exceed that level, the

health maintenance organization may not issue new

point-of-service riders until the expenses fall below that level

or until the health maintenance organization obtains a

certificate of authority as an insurer.

point-of-service rider may be limited to those services defined

in the evidence of coverage and may be subject to different

cost-sharing provisions. The cost-sharing provisions for

indemnity benefits may be higher than the cost-sharing provisions

for in-network health maintenance organization coverage. For

enrollees in a limited provider network, higher cost-sharing may

be imposed only when benefits or services are obtained outside

the health maintenance organization delivery network.

(d) A health maintenance organization that issues a

point-of-service rider under this section must meet additional

net worth requirements prescribed by the commissioner. The

commissioner shall base the net worth requirements on the

actuarial relation of the amount of insurance risk assumed

through the point-of-service rider to the amount of solvency and

reserve requirements otherwise required of the health maintenance

organization.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Sec. 843.109. PAYMENT BY GOVERNMENTAL OR PRIVATE ENTITY. A

health maintenance organization may accept from a governmental or

private entity payments for all or part of the cost of services

provided or arranged for by the health maintenance organization.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Sec. 843.110. CORPORATION, PARTNERSHIP, OR ASSOCIATION POWERS.

A health maintenance organization has all powers of a

partnership, association, or corporation, including a

professional association or corporation, as appropriate under the

organizational documents of the health maintenance organization,

that are not in conflict with this chapter or other applicable

law.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Sec. 843.111. GROUP MODEL HEALTH MAINTENANCE ORGANIZATIONS. (a)

In this section, "group model health maintenance organization"

means a health maintenance organization that provides the

majority of its professional services through a single group

medical practice that is formally affiliated with the medical

school component of a state-supported public college or

university in this state.

(b) Unless this section and a power specified in Section

843.101, 843.103, 843.104, 843.106, 843.107, 843.109, or 843.110

are specifically amended by law, a law, without regard to the

time of enactment, may not be construed to prohibit or restrict a

group model health maintenance organization from:

(1) selectively contracting with or declining to contract with a

provider as the group model health maintenance organization

considers necessary;

(2) contracting for or declining to contract for an individual

health care service or full range of health care services as the

group model health maintenance organization considers necessary,

if the service or services may be legally provided by the

contracting provider; or

(3) requiring enrolled members of the group model health

maintenance organization who wish to obtain the services covered

by the group model health maintenance organization to use the

providers specified by the group model health maintenance

organization.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

2003.

Sec. 843.112. DENTAL POINT-OF-SERVICE OPTION. (a) In this

section:

(1) "Point-of-service option" means a plan provided through a

contractual arrangement under which:

(A) indemnity benefits for the cost of dental care services,

other than emergency care or emergency dental care, are provided

by an insurer or group hospital service corporation in

conjunction with corresponding benefits arranged or provided by a

health maintenance organization; and

(B) an enrollee may choose to obtain benefits or services under

the indemnity plan or the health maintenance organization plan in

accordance with specific provisions of a point-of-service

contract.

(2) "Provider panel" means the providers with whom a health

maintenance organization contracts to provide dental services to

enrollees covered under a dental benefit plan.

(b) This section applies to a dental health maintenance

organization or another single service health maintenance

organization that provides dental benefits. This section does not

apply to a health maintenance organization that has 10,000 or

fewer enrollees in this state who are enrolled in dental benefit

plans based on a provider panel.

arrangement that employs 25 or more employees or has 25 or more

members offers and contributes to the cost of dental benefit plan

coverage to employees or individuals only through a provider

panel, the health maintenance organization with which the

employer, association, or other private group arrangement is

contracting for the coverage shall offer, or contract with

another entity to offer, a dental point-of-service option to the

employer, association, or other private group arrangement. The

employer may offer the dental point-of-service option to the

employee or individual to accept or reject.

(d) If a health maintenance organization's dental provider panel

is the sole delivery system offered to employees by an employer,

the health maintenance organization:

(1) shall offer the employer a dental point-of-service option;

(2) may not impose a minimum participation level on the dental

point-of-service option; and

(3) as part of the group enrollment application, shall provide

to each employer discl

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

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