Beginning January 1, 2014, new federal requirements will apply to health insurer and health maintenance organization (HMO) rates and policy forms. The department has received numerous inquiries regarding its review and regulation of Texas health insurer and HMO rates and policy forms for products that must comply with the new federal requirements. The department recognizes that insurers and HMOs are concerned about ensuring their products comply with existing state requirements and the new federal standards. The intent of this bulletin is to provide guidance on how the department will approach regulating rates and policy forms going forward.
Form Review
The policy form review process in Texas focuses on health insurer and HMO compliance with state requirements. The department will continue to review all policy language for compliance with Texas laws and regulations. In addition, when addressing complaints, the department will require that health insurers and HMOs comply with the terms of the policies they have issued, regardless of whether a particular term is based on a federal or state law.
Rate Review
The department will continue to review rate increases as it has in the past. In reviewing rates, the department assesses whether a proposed increase is just, fair, reasonable, and adequate under Insurance Code §560.002; and it reviews whether the proposed rate complies with any other specific requirements in the Insurance Code applicable to that particular insurance product.
Expedited Review
The department recognizes that insurers and HMOs face narrow time frames within which their forms and rates must be approved by both state and federal regulators. The department is committed to processing filings in an expedited manner. To facilitate a timely review, and in light of the number of filings the department anticipates, the department urges health insurers and HMOs to make all necessary filings as soon as possible. Health insurers and HMOs should contact the department as issues or problems arise during this file and review process, so that the department may provide assistance in resolving these matters quickly.
Geographic Rating Areas
Federal regulations recently adopted by the U.S. Department of Health and Human Services establish geographic rating areas for each state based on the number of metropolitan statistical areas (MSAs) in the state. The regulations established 26 geographic rating areas for Texas: one for each of the 25 MSAs located in Texas, and one additional geographic rating area that applies to all areas of the state not part of an MSA.
The federal regulations allow states to propose alternative geographic rating areas. Any proposed alternative geographic rating areas must be based on actuarial justification. Texas will not propose alternative geographic rating areas for 2014. The federal default of one rating area for each of the 25 MSAs in the state and one rating area comprising all non-MSAs in the state will apply for policies sold in the individual and small group markets in Texas. After 2014, Texas will have an opportunity to evaluate geographic rating areas.
Form and Rate Filing Assistance for New Market Entrants
The department recognizes that new entrants to the Texas insurance marketplace may need additional support in preparing filings for state review. To facilitate compliance with state requirements, the department will be conducting additional outreach to insurers and HMOs in the months to come. The department advises health insurers and HMOs that would like to stay informed regarding this outreach to sign up for the department's eNews updates at tdi.texas.gov/alert/emailnews.html. An additional resource, the department's accident and health form checklists, can be found at tdi.texas.gov/forms/form10accident.html.
In addition, the department anticipates that health insurers and HMOs complying with the federal requirements in the small group market may trigger a change in rating methodology filing under state regulations. The department urges insurers and HMOs to review the requirements for the change in rating methodology in the small employer market found in 28 TAC §26.11.
Health insurers and HMOs can find additional information on the department's life and health insurance web page at tdi.texas.gov/health/indexlh.html. The life and health insurance web page includes links to the following items:
- form filing FAQs
- common reasons for department rejections of filings
- filing fee amounts
- The life and health transmittal checklist
You should direct questions regarding this bulletin to: Amy Einhorn at amy.einhorn@tdi.texas.gov.
Eleanor Kitzman
Commissioner of Insurance