SUBCHAPTER LL. Health coverage awareness and education program

28 TAC §§3.9301 - 3.9306

1. INTRODUCTION.

2. REASONED JUSTIFICATION. The new sections are necessary to implement SB 261, enacted by the 79th Legislature, Regular Session, which added Chapter 524 to the Insurance Code. SB 261 requires the Department to develop public educational programs that disseminate pertinent information about health coverage options, including health savings accounts and compatible high deductible health benefit plans, and authorizes the Department to accept gifts, grants, and donations for this purpose. In addition, Chapter 524 required the Department to submit the proposed rules to the Texas Ethics Commission for review and to consider the recommendations of the Commission before adopting the proposed rules. The Department submitted the proposed rules to the Texas Ethics Commission, considered the recommendations from the Commission, and incorporated several of the recommendations from the Commission.

The Department has changed some of the proposed language in the text of the rule as adopted in response to written comments and has made other changes for purposes of clarification and readability. The changes do not introduce new subject matter or affect persons in addition to those subject to the proposal as published. Changes were made to §3.9305(a) and (d) in response to comments received. A commenter said that §3.9305(a) should be changed to require that an offeree give notice that it is not subject to one of the situations described in the subsection, rather than when it is subject to one of the situations. The Department agrees in part, and has modified the subsection to require that an offeree give notice of whether it is subject to one of the situations described in the subsection. A commenter asked that §3.9305(d) be modified to track the language of §3.9305(a) more closely, and the requested change has been made. In addition to these changes, the Department has made non-substantive minor editorial changes in §§3.9303(a) and (c), 3.9304(b)(1), §3.9305(a)(1) - (3), and 3.9306(c) for purposes of clarification and readability. Adopted §3.9303(a) and 3.9306(c) have been changed to place the subsections in an active rather than passive voice. Adopted §3.9304(b)(1) has been changed to reflect more clearly the bid acceptance process of the Department. Adopted §3.9305(a)(1) - (3) has been changed for purposes of grammatical consistency, clarification, and readability.

3. HOW THE SECTIONS WILL FUNCTION. Section 3.9301 specifies that the purpose of the subchapter is to establish procedures regarding the Department's acceptance of donations for assistance in the funding of the Health Coverage Awareness and Education Program and to establish procedures to govern the relationship between employees of the Department, offerees, and donors regarding the acceptance of such donations. Section 3.9302 sets forth definitions for use in the subchapter. Section 3.9303 prescribes that the Commissioner or the Commissioner's designee may accept donations on behalf of the Department and that all donations become state property and are subject to applicable federal and state laws and regulations. While §3.9303 provides that the Commissioner or the Commissioner's designee may accept a donation in the manner authorized by the section, §3.9303 makes clear that only the Commissioner, in the Commissioner's sole discretion, may decline to accept a donation. Section 3.9304 establishes limitations for offerees and donors. Section 3.9304(a) addresses offerees that are seeking to contract with the Department. Section 3.9302(10) defines the term s eeking to contract as submitting a bid response to the Department. Under §3.9304(a), an offeree who submits a bid response to the Department, including a formal bid response, a formal bid proposal, an informal price quote, a submission of specifications or qualifications, or direct contract negotiations, must notify the Department of this fact in a form acceptable to the Department. Additionally, §3.9304(a) requires offerees seeking to contract with the Department to disclose all previous donations made to the Department or any other state agency within the preceding two years. Section 3.9304(b) prohibits an offeree who has submitted a bid response to the Department from making a donation to the Department from the date the bid response is submitted to the Department until a date subsequent to the award of the bid. If the Department awards the bid to the offeree, that date is one year after the award. If the Department does not award the bid to the offeree, that date is the 90th day after the award. Lastly, §3.9304(c) prohibits a donor from submitting a bid response to the Department for a period of one year following the date the donation agreement was executed by the donor and the Commissioner or by the donor and the Commissioner's designee. Section 3.9305 establishes limitations for entities that are subject to Department regulation pursuant to the Insurance Code, the Labor Code, and federal law. Section 3.9305(a) establishes that, prior to executing the donation agreement described by §3.9306 (relating to Procedures for Acceptance of Donations), an offeree that is subject to Department regulation pursuant to the Insurance Code, the Labor Code, or federal law, shall notify the Department of whether the offeree is the subject of an open investigation or enforcement action of the Department; is applying for a certificate of authority, license, or other Department issued permit; is seeking a letter of consent pursuant to 18 U.S.C. §1033; or is the subject of an enforcement action of another state agency. Section 3.9305(b) requires that licensees; certificate holders; permit holders; applicants for a license, certificate of authority, or other Department issued permit; individuals requesting letters of consent pursuant to 18 U.S.C. §1033; and employers, employees, and providers who engage in the business of insurance or participate in the worker's compensation system in this state are subject to the provisions of the section. Section 3.9305(c) requires the §3.9305(a) notification to include the docket number, style, and filing date of an enforcement action, if applicable. Section 3.9305(d) prohibits an offeree that is subject to subsection (a) of the section from making a donation to the Department from the date that the Department initiates an open investigation or enforcement action against the offeree; the offeree applies for a certificate of authority, license, or other Department issued permit; the offeree requests a letter of consent pursuant to 18 U.S.C. §1033; or another state agency initiates an enforcement action against the offeree until the 90th day after the date the Department or other state agency closes its open investigation or reaches final disposition in its enforcement action; the Department issues or denies the certificate of authority, license, or other Department issued permit; or the Department provides or refuses to provide a letter of consent pursuant to 18 U.S.C. § 1033. This provision imposes a longer time period than is prescribed in the Government Code §575.005, which requires that a state agency may not accept a gift from a person who is a party to a contested case before the agency until the 30th day after the date the decision in the case becomes final under §2001.144 of the Government Code. Lastly, §3.9305(e) specifies that the notification required by subsection (a) of the section is not required for form filings, data calls, or other matters not specified in subsection (a) of the section. Prior to accepting a donation, §3.9306(a) requires the offeree and the Commissioner or the Commissioner's designee to execute a donation agreement that must include several pieces of information, including a description of the donation; the name and signature of the offeree; the purpose of the donation; a statement identifying whether the disclosures required by §§3.9304 and 3.9305 of this subchapter (relating to Limitations on Offerees and Donors and Limitations on Entities Subject to Department Regulation) are applicable to the offeree and, if so, whether the disclosures have been tendered in a form acceptable to the Department; and a statement advising the offeree to seek any desired legal and/or tax advice from its own legal counsel. Section 3.9306(b) provides that the Commissioner or the Commissioner's designee may accept grant money only after the offeree and the Commissioner or the Commissioner's designee have executed the donation agreement required in subsection (a) of the section. Section 3.9306(c) requires the Commissioner or the Commissioner's designee to deposit in accordance with state law all monetary contributions received from donations made pursuant to the Insurance Code §524.005 and to use all monetary contributions received from donations for purposes consistent with §524.005.

4. SUMMARY OF COMMENTS AND AGENCY RESPONSE.

§3.9302(1)

Comment: A commenter seeks clarification of the definition for bid response in §3.9302(1), asking in particular what is considered a similar submission or communication. The commenter asks if a health plan would be allowed to make a donation if it is bidding to serve as the administrator of the Texas Health Insurance Risk Pool. The commenter also notes that TDI is currently assisting in development of a small employer insurance plan in the Houston area and asks if an entity that made a donation to TDI would be prohibited from bidding to administer or provide this plan.

Agency Response: A similar submission or communication would be a submission or communication that is given in response to a departmental request for goods or services and that contains the same information or conveys the same intent as the types of responses noted in the definition of bid response.

The Risk Pool's Board of Directors, not the Department, administers the Texas Health Insurance Risk Pool. As such, an entity seeking to serve as administrator of the Risk Pool would submit a bid to the Risk Pool Board, not the Department.

The Harris County Healthcare Alliance, not the Department, is administering the small employer insurance plan the commenter described. As such, an entity seeking to administer or provide this plan would submit a bid to the Harris County Healthcare Alliance rather than to the Department.

§3.9305(a)(1) - (4)

Comment: A commenter suggests that the Department revise the rule proposal to provide that potential donors notify the Department if they are not involved in any of the situations described in §3.9305(a)(1) - (4), rather than requiring potential donors to fill out a form that states they are involved in such a situation and therefore cannot make a contribution until the 90th day after final disposition.

Agency Response: The Department agrees in part with this comment and disagrees in part. The Department recognizes that to allow an offeree to state that it is not subject to a situation described in subsection (a)(1) - (4), as requested by the commenter, would promote efficiency and clarify communication between an offeree and the Department. However, it is important that the Department be notified when an offeree is subject to a situation described in subsection (a)(1) - (4), because with such information the Department can more quickly verify whether an offeree is qualified to make a donation. For this reason, proposed subsection (a) has been changed to specify that an offeree must notify the Department whether it is subject to a situation described in subsection (a)(1) - (4). As requested by the commenter, an offeree not subject to a specified situation must notify the Department of that fact; but if an offeree is subject to a specified situation, it also must notify the Department accordingly. In addition to changes in response to the comment, changes have been made to the text of subsection (a)(1) - (3) for purposes of grammatical consistency, clarification, and readability.

Comment: In regard to §3.9305(a)(1) and (4), a commenter seeks clarification as to what constitutes an open investigation or an enforcement action by TDI or another state agency. The commenter notes that health plans receive letters regarding every complaint filed with TDI and asks if such a letter constitutes an open investigation. The commenter says that the proposed rule is specific to a contested case with a notice of intent, report to the Commissioner, or a notice of hearing. The commenter says that without clarification, the proposed language is overly broad and could serve to severely restrict donations.

Agency Response: An open investigation and an enforcement action are parts of an open enforcement action. An open enforcement action commences when the Department's Enforcement Division opens a file at the beginning of an investigation. Other departmental action, however, such as tendering a letter to a carrier regarding a consumer complaint, may also open an enforcement action. Thus if an offeree has received such a letter, it should notify the Department of the letter so the Department may determine whether the offeree is the subject of an open enforcement action and thus disqualified from donating.

§3.9305(d)

Comment: A commenter says that §3.9305(d) should be revised to track the language of §3.9305(a) more closely. The commenter adds that further clarification of when any such action is considered to be initiated would also be useful.

Agency Response: The Department agrees and has changed the §3.9305(d) accordingly. The point of initiation depends on which event in subsection (a) is referenced. In the first instance, the Department would initiate by opening a file. In the second and third instance, the offeree would initiate, either by submitting an application or a request to the Department, and the initiation date would be the date of submission. In the fourth instance, another state agency would initiate by taking the necessary measures to prosecute an enforcement action. The initiation date would be the date the state agency gives notice to the offeree that it is proceeding with an enforcement action.

5. NAMES OF THOSE COMMENTING FOR AND AGAINST THE PROPOSAL.

For, with changes: Texas Association of Health Plans.

Against: None.

6. STATUTORY AUTHORITY. The sections are adopted pursuant to the Insurance Code §§524.005 and 36.001. Insurance Code §524.005 requires the Department to adopt rules governing the acceptance of donations that will fund the Health Coverage Awareness and Education Program and requires that these rules be consistent with the Government Code Chapter 575. Section 36.001 provides that the Commissioner of Insurance may adopt any rules necessary and appropriate to implement the powers and duties of the Texas Department of Insurance under the Insurance Code and other laws of this state.

7. TEXT.

§3.9301. Purpose. This subchapter establishes procedures for the acceptance of donations by the Texas Department of Insurance to assist with the funding of the Health Coverage Awareness and Education Program and to establish procedures to govern the relationships between employees of the department, offerees, and donors regarding the acceptance of such donations, as authorized in the Insurance Code §524.005.

§3.9302. Definitions. For purposes of this subchapter, the following words and terms shall have the following meanings, unless the context clearly indicates otherwise.

(1) Bid response--A response to a departmental request for goods or services, including a formal bid response, a formal bid proposal, an informal price quote, a submission of specifications or qualifications, direct contract negotiations, or any other similar submission or communication.

(2) Commissioner--The Commissioner of Insurance.

(3) Department--The Texas Department of Insurance.

(4) Donation-- Money, real or personal property, or any other tangible or intangible thing of value delivered to the department by gift or grant.

(5) Donation agreement--A written document executed by the commissioner or the commissioner's designee and an offeree that includes the information required in §3.9306 of this subchapter (relating to Procedures for Acceptance of Donations).

(6) Donor--An individual, corporation, association, firm, partnership, committee, club organization, person, group of persons, or other entity that has made a donation to the department.

(7) Employee--An individual employed by the department in a full or part time capacity.

(8) Offeree--An individual, corporation, association, firm, partnership, committee, club organization, person, group of persons, or other entity that offers or seeks to make a donation to the department.

(9) Program--The Health Coverage Awareness and Education Program, as authorized in the Insurance Code Chapter 524.

(10) Seeking to contract--Submitting a bid response to the department.

§3.9303. Acceptance of Donations.

(a) The commissioner or the commissioner's designee may accept a donation only for the purposes authorized in the Insurance Code Chapter 524 in the manner authorized in this subchapter. The commissioner or the commissioner's designee must accept all donations on behalf of the department and not in an individual capacity.

(b) The commissioner, in the commissioner's sole discretion, may decline to accept any donation.

(c) Donations the commissioner or the commissioner's designee accept become state property and are subject to all applicable federal and state laws and regulations.

§3.9304. Limitations on Offerees and Donors.

(a) Prior to executing the donation agreement described by §3.9306 of this subchapter (relating to Procedures for Acceptance of Donations), an offeree seeking to contract with the department shall:

(1) notify the department, in a form acceptable to the department, that the offeree is seeking to contract with the department; and

(2) disclose all previous donations made to the department or any other state agency within the preceding two years. The disclosure shall be in a form acceptable to the department and shall include the nature and value of the donation and the date the donation was made. If the donation is ongoing, the date of the donation shall be the last date the donation was delivered to the department or other state agency.

(b) An offeree who has submitted a bid response to the department may not make a donation from the date the offeree submits the bid response until a date subsequent to the award of the bid, as paragraphs (1) and (2) of this subsection specify.

(1) If the department awards the bid to the offeree, one year after the award of the bid; or

(2) if the department does not award the bid to the offeree, the 90th day after the award of the bid.

(c) A donor who has made a donation to the department may not submit a bid response to the department for a period of one year following the date the donation agreement was executed by the donor and the commissioner or by the donor and the commissioner's designee.

§3.9305. Limitations on Entities Subject to Department Regulation.

(a) Prior to executing the donation agreement described by §3.9306 of this subchapter (relating to Procedures for Acceptance of Donations), an offeree subject to department regulation pursuant to the Insurance Code, the Labor Code, or federal law, must notify the department, on a completed form that is acceptable to the department, whether the offeree:

(1) is the subject of an open investigation or enforcement action of the department;

(2) has applied for a certificate of authority, license, or other department issued permit;

(3) is seeking a letter of consent pursuant to 18 U.S.C. §1033; or

(4) is the subject of an enforcement action of another state agency.

(b) Individuals and entities subject to subsection (a) of this section include:

(1) licensees; certificate holders; permit holders; applicants for a license, certificate of authority, or other department issued permit;

(2) individuals requesting letters of consent pursuant to 18 U.S.C. §1033; and

(3) employers, employees, and providers who engage in the business of insurance or participate in the worker's compensation system in this state.

(c) The notification required in subsection (a) of this section must include the docket number, style, and filing date of the enforcement action, if applicable.

(d) An offeree subject to subsection (a) of this section may not make a donation to the department from the date the department initiates an open investigation or enforcement action against the offeree; the offeree applies for a certificate of authority, license, or other department issued permit; the offeree requests a letter of consent pursuant to 18 U.S.C. §1033; or another state agency initiates an enforcement action against the offeree; until the 90th day after the date the department or other state agency closes its open investigation or reaches final disposition in its enforcement action; the department issues or denies the certificate of authority, license, or other department issued permit; or the department provides or refuses to provide a letter of consent pursuant to 18 U.S.C. §1033.

(e) A notification pursuant to subsection (a) of this section is not required for form filings, data calls, or other matters not specified in subsection (a) of this section.

§3.9306. Procedures for Acceptance of Donations.

(a) Donation agreement. Prior to accepting any donation, the offeree and the commissioner or the commissioner's designee shall execute a donation agreement that includes the following information:

(1) the name of the offeree;

(2) a description of the donation, including a determination of the value;

(3) a statement by the offeree attesting to its ownership rights in the property, including intellectual property ownership rights;

(4) the signature of the offeree if the offeree is an individual or its official representative if the offeree is a business organization;

(5) the signature of the commissioner or the commissioner's designee;

(6) the purpose of the donation;

(7) the mailing address of the offeree and principal place of business if the offeree is a business entity;

(8) a statement identifying any official relationship between the offeree and the department;

(9) a statement identifying whether the disclosures required by §3.9304 and §3.9305 of this subchapter (relating to Limitations on Offeree and Donors and Limitations on Entities Subject to Department Regulation) are applicable to the offeree, and, if so, whether the offeree has tendered the disclosures to the department in a form acceptable to the department; and

(10) a statement advising the offeree to seek any desired legal and/or tax advice from its own legal counsel.

(b) Grants. The commissioner or the commissioner's designee may accept grant money only after the offeree and the commissioner or the commissioner's designee have executed the donation agreement required in subsection (a) of this section.

(c) Deposited funds. The commissioner or commissioner's designee shall deposit in accordance with state law all monetary contributions received from donations made pursuant to the Insurance Code §524.005 and shall use all such contributions for purposes consistent with §524.005.