Texas Health Insurance Exchange Can’t Sell Coverage Before 2028

The text as introduced · 3,330 words

89R15813 SCF-F

By: Raymond
H.B. No. 5455

A BILL TO BE ENTITLED

AN ACT

relating to creation of the Texas Health Insurance Exchange;

authorizing a fee.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subtitle G, Title 8, Insurance Code, is amended

by adding Chapter 1511 to read as follows:

CHAPTER 1511. TEXAS HEALTH INSURANCE EXCHANGE

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 1511.001. DEFINITIONS. In this chapter:

(1) "Board" means the board of directors of the

exchange.

(2) "Exchange" means the Texas Health Insurance

Exchange.

(3) "Executive commissioner" means the executive

commissioner of the Health and Human Services Commission.

(4) "Qualified health plan" means a health benefit

plan that has been certified by the board as meeting the criteria

established under Section 1311(c), Patient Protection and

Affordable Care Act (42 U.S.C. Section 18031(c)).

(5) "Secretary" means the secretary of the United

States Department of Health and Human Services.

Sec. 1511.002. PURPOSE. The purpose of this chapter is to

create, manage, and maintain the exchange to:

(1) benefit the state health insurance market and

individuals enrolling in health benefit plans;

(2) facilitate or assist in facilitating the

purchasing of qualified health plans on the exchange by qualified

enrollees in the individual market or the individual and small

group markets; and

(3) minimize barriers to enrollment in qualified

health plans offered on the exchange.

Sec. 1511.003. TREATMENT OF EMPLOYERS. (a) For purposes of

this chapter, "small employer" means a person who employed at least

two, and an average of not more than 50 employees during the

preceding calendar year.

(b) All persons treated as a single employer under Section

414(b), (c), (m), or (o), Internal Revenue Code of 1986, are single

employers for purposes of this chapter.

(c) An employer and any predecessor employer are a single

employer for purposes of this chapter.

(d) In determining the number of employees of an employer

under this section, the number of employees:

(1) includes part-time employees and employees who are

not eligible for coverage through the employer; and

(2) for an employer that did not have employees during

the entire preceding calendar year, is the average number of

employees that the employer is reasonably expected to employ on

business days in the current calendar year.

(e) A small employer that makes enrollment in qualified

health plans available to its employees through the exchange and

ceases to be a small employer by reason of an increase in the number

of its employees continues to be a small employer for purposes of

this chapter as long as it continuously makes enrollment through

the exchange available to its employees.

Sec. 1511.004. RULEMAKING AUTHORITY. The board may adopt

rules necessary and proper to implement this chapter. Rules adopted

under this section may not conflict with or prevent the application

of regulations promulgated by the secretary under the Patient

Protection and Affordable Care Act (Pub. L. No. 111-148).

Sec. 1511.005. AGENCY COOPERATION. (a) The exchange, the

department, and the Health and Human Services Commission shall

cooperate fully in performing their respective duties under this

code or another law of this state relating to the operation of the

exchange.

(b) The Health and Human Services Commission shall

cooperate and coordinate with the exchange to ensure eligibility

systems are able to communicate and are sufficiently integrated to

facilitate a seamless user experience.

Sec. 1511.006. THIRD PARTY AUDIT OF EXCHANGE SYSTEM. (a)

Before the initial open enrollment period for the exchange, the

board shall engage an independent third party audit team that

specializes in exchange system technology to:

(1) verify and validate new technology functionality

throughout the design, development, and implementation phases of

the exchange system to ensure the system is working as designed and

intended; and

(2) provide to the board a report on the team's

findings.

(b) The earliest initial enrollment period for the exchange

may not begin until after the board receives the audit team's report

under Subsection (a).

Sec. 1511.007. EXEMPTION FROM STATE TAXES AND FEES. The

exchange is not subject to any state tax, regulatory fee, or

surcharge, including a premium or maintenance tax or fee.

Sec. 1511.008. COMPLIANCE WITH FEDERAL LAW. The exchange

shall comply with all applicable federal law and regulations.

Sec. 1511.009. EXEMPTION FROM STATE PURCHASING PROCEDURES.

The exchange is not subject to state purchasing or procurement

requirements under Subtitle D, Title 10, Government Code, or any

other law.

SUBCHAPTER B. ESTABLISHMENT AND GOVERNANCE

Sec. 1511.051. ESTABLISHMENT. The Texas Health Insurance

Exchange is established as an American Health Benefit Exchange and

a Small Business Health Options Program (SHOP) Exchange authorized

and required by Section 1311, Patient Protection and Affordable

Care Act (42 U.S.C. Section 18031).

Sec. 1511.052. GOVERNANCE OF EXCHANGE; BOARD MEMBERSHIP.

(a) The exchange is governed by a board of directors.

(b) The board consists of the following 11 members:

(1) nine members appointed as follows:

(A) three members appointed by the governor;

(B) three additional members appointed by the

governor from a list of nominees submitted by the speaker of the

house of representatives; and

(C) three members appointed by the lieutenant

governor; and

(2) two ex officio, nonvoting members as follows:

(A) the commissioner or the commissioner's

designee; and

(B) the executive commissioner or the executive

commissioner's designee.

(c) In making appointments or nominations under this

section, the governor, lieutenant governor, and speaker of the

house of representatives must include representation from

participating health plans, consumers, small employers, brokers,

or providers.

Sec. 1511.053. PRESIDING OFFICER. The board shall annually

designate one member of the board to serve as presiding officer.

Sec. 1511.054. TERMS; VACANCY. (a) Appointed members of

the board serve two-year terms, with the members' terms expiring

February 1 of each odd-numbered year.

(b) Members may be reappointed but may not serve more than

three terms.

(c) The appropriate appointing authority shall fill a

vacancy on the board by appointing, for the unexpired term, an

individual who has the appropriate qualifications to fill that

position.

Sec. 1511.055. CONFLICT OF INTEREST. (a) Any board member

or a member of a committee formed by the board with a direct

personal interest in a matter before the board shall abstain from

deliberations and actions on the matter in which the conflict of

interest arises and shall further abstain from any vote on the

matter, and may not otherwise participate in a decision on the

matter.

(b) Each board member shall file a conflict of interest

statement and a statement of ownership interests with the board to

ensure disclosure of all existing and potential personal interests

related to board business.

Sec. 1511.056. GENERAL DUTIES OF BOARD MEMBERS. (a) Each

board member has the responsibility and duty to meet the

requirements of this title and applicable state and federal laws

and regulations, to serve the public interest of the individuals

and small businesses seeking health benefit plan coverage through

the exchange, and to ensure the operational well-being and fiscal

solvency of the exchange.

(b) A member of the board may not make, participate in

making, or in any way attempt to use the board member's official

position to influence the making of any decision that the board

member knows or has reason to know will have a material financial

effect, distinguishable from its effect on the public generally, on

the board member or the board member's immediate family, or on:

(1) any source of income, other than gifts and loans by

a commercial lending institution in the regular course of business

on terms available to the public generally, aggregating $250 or

more in value, provided or promised to the member within the 12

months immediately preceding the date the decision is made; or

(2) any business entity in which the member is a

director, officer, partner, trustee, or employee, or holds any

position of management.

Sec. 1511.057. REIMBURSEMENT. A member of the board is not

entitled to compensation but is entitled to reimbursement for

travel or other expenses incurred while performing duties as a

board member in the amount provided by the General Appropriations

Act for state officials.

Sec. 1511.058. MEMBER'S IMMUNITY. (a) A member of the

board is not liable for an act or omission made in good faith in the

performance of powers and duties under this chapter.

(b) A cause of action does not arise against a member of the

board for an act or omission described by Subsection (a).

Sec. 1511.059. OPEN RECORDS AND OPEN MEETINGS. The board is

subject to Chapters 551 and 552, Government Code.

Sec. 1511.060. RECORDS. The board shall keep records of the

board's proceedings for at least seven years.

SUBCHAPTER C. POWERS AND DUTIES OF EXCHANGE

Sec. 1511.101. EMPLOYEES; WORKING GROUPS. (a) The board

may employ an executive director and any other agents and employees

that the board considers necessary to assist the exchange in

carrying out its responsibilities and functions.

(b) The executive director shall organize, administer, and

manage the operations of the exchange. The executive director may

hire other employees as necessary to carry out the responsibilities

of the exchange.

(c) The exchange may appoint appropriate legal, actuarial,

technology, and other working groups necessary to provide

assistance in operating the exchange and performing any of the

functions of the exchange.

(d) The exchange shall on a regular basis make exchange

enrollment data available through public use files.

Sec. 1511.102. ADVISORY COMMITTEE. The board shall appoint

an advisory committee to allow for the involvement of key

stakeholders in the operation of the exchange. The advisory

committee may provide expertise and recommendations to the board

but may not adopt rules or enter into contracts on behalf of the

exchange.

Sec. 1511.103. CONTRACTS. (a) Except as provided by

Subsection (b), the exchange may enter into any contract that the

exchange considers necessary to implement or administer this

chapter, including a contract with the department, the Health and

Human Services Commission, or an entity that has experience in

individual and small group health insurance, benefit

administration, or other experience relevant to the

responsibilities assumed by the entity, to perform functions or

provide services in connection with the operation of the exchange.

(b) The exchange may not enter into a contract with a health

benefit plan issuer under this section.

(c) The exchange shall develop and adopt a competitive

procurement process that promotes fairness and efficiency and

best-in-class performance for each functional component of the

exchange.

Sec. 1511.104. INFORMATION SHARING AND CONFIDENTIALITY.

(a) The exchange may enter into information-sharing agreements

with federal and state agencies to carry out the exchange's

responsibilities under this chapter. An agreement entered into

under this section must include adequate protection with respect to

the confidentiality of any information shared and comply with all

applicable state and federal law.

(b) The exchange shall protect personally identifiable

health and financial information in accordance with all applicable

state and federal laws and regulations.

Sec. 1511.105. MEMORANDUM OF UNDERSTANDING. The exchange

shall enter into a memorandum of understanding with the department

and the Health and Human Services Commission regarding the exchange

of information and the division of regulatory functions among the

exchange, the department, and the commission.

Sec. 1511.106. LEGAL ACTION. (a) The exchange may sue or

be sued.

(b) The exchange may take any legal action necessary to

recover or collect amounts due the exchange, including:

(1) fees due the exchange;

(2) amounts erroneously or improperly paid by the

exchange; and

(3) amounts paid by the exchange as a mistake of fact

or law.

Sec. 1511.107. FUNCTIONS. (a) The exchange shall perform

all functions and duties related to state-based exchanges required

by applicable state and federal law, except for functions and

duties related to the federal risk adjustment program.

(b) The exchange shall replicate, to the extent feasible,

the processes and enrollment formats used by the federal health

insurance exchange to ensure a successful implementation and

encourage health plan participation on the exchange.

Sec. 1511.108. HEALTH CARE PROVIDER DIRECTORY AND

INFORMATION. (a) The exchange may provide an integrated and

uniform consumer directory of health care providers indicating

which health benefit plan issuers the providers contract with and

whether the providers are currently accepting new patients.

(b) The exchange may establish methods by which health care

providers may transmit relevant information directly to the

exchange, rather than through an issuer.

Sec. 1511.109. STATE-ADMINISTERED SUBSIDY PROGRAM. (a)

Not later than July 1, 2026, the exchange, in coordination with the

department, shall review and make recommendations to the Senate

Business and Commerce Committee and the House of Representatives

Insurance Committee regarding the feasibility of implementing a

state-administered subsidy program for individuals, families, and

small employers to purchase health benefit plan coverage. The

recommendations must include considerations regarding the best use

for any savings generated from the transition to a state-based

health insurance exchange.

(b) With the input and approval of the Senate Business and

Commerce Committee and the House of Representatives Insurance

Committee, the exchange may develop and implement a

state-administered subsidy program.

Sec. 1511.110. ENHANCED DIRECT ENROLLMENT PATHWAY. (a)

The exchange shall create a pathway for web brokers, insurers, and

licensed health insurance agents and brokers to enroll individuals

in subsidized coverage in a manner that is consistent with

enrolling those individuals in coverage through the exchange.

(b) The exchange shall model the pathway created under

Subsection (a) after the enhanced direct enrollment pathway

operated by the federal Centers for Medicare and Medicaid Services

for the federal health insurance exchange.

(c) To the extent practicable and consistent with sound

policy and the goals of the exchange, the pathway created under

Subsection (a) shall establish standards and requirements for the

certification of web brokers, insurers, and licensed health

insurance agents and brokers that are consistent with the standards

and requirements for certification established for the federal

health insurance exchange.

(d) In an effort to minimize duplication of effort and waste

and to promote sound policy and the goals of the exchange, the

technical requirements, connection protocols, and security

standards for the pathway created under Subsection (a) shall be

consistent with the requirements, protocols, and standards

developed for the federal health insurance exchange.

(e) The exchange must create the pathway under Subsection

(a) as part of the initial development of the exchange and may not

delay creation of the pathway to a later date.

Sec. 1511.111. FEDERAL WAIVERS. (a) Not later than July 1,

2026, the exchange, in coordination with the department, shall

review and make recommendations to the Senate Business and Commerce

Committee and the House of Representatives Insurance Committee

regarding the submission of a state innovation waiver that may be

granted under Section 1332, Patient Protection and Affordable Care

Act (42 U.S.C. Section 18052), with respect to health benefit plan

coverage or health insurance products in this state, including

recommendations on:

(1) risk stabilization strategies aimed at addressing

risk associated with individuals with high health care costs;

(2) individual coverage health reimbursement

arrangements for employees of large and small businesses in this

state;

(3) financial assistance for different types of health

benefit plan coverage, including non-qualified health plans for

individuals purchasing coverage; and

(4) the establishment of account-based premium

credits for individuals and families enrolled in coverage through

the exchange.

(b) With the input of the Senate Business and Commerce

Committee and the House of Representatives Insurance Committee, the

exchange may submit one or more applications to the secretary to

obtain a waiver of any applicable provisions of the Patient

Protection and Affordable Care Act (Pub. L. No. 111-148).

(c) On approval by the secretary of a waiver under

Subsection (b), the exchange may implement the approved waiver.

SUBCHAPTER D. FUNDING FOR OPERATION OF EXCHANGE

Sec. 1511.151. USER FEES. (a) The exchange may charge a

user fee to issuers offering qualified health plans on the exchange

as reasonable and necessary to cover the exchange's organizational

and operating expenses and expenses related to health coverage

programs associated with the exchange. User fees must be

determined annually. The exchange may charge interest for late

user fees. User fees may not exceed three percent of total premiums

for qualified health plans on the exchange.

(b) The commissioner shall adopt rules to implement and

enforce the assessment of user fees for health benefit plan issuers

offering coverage on the exchange as authorized under this section.

Sec. 1511.152. GRANTS AND FEDERAL MONEY. (a) The exchange

may accept a grant from a public or private organization and may

spend that money to pay the costs of program administration and

operations.

(b) The exchange may accept federal money and shall use that

money in compliance with applicable federal law, regulations, and

guidelines.

Sec. 1511.153. USE OF EXCHANGE ASSETS; ANNUAL REPORT. (a)

The assets of the exchange may be used only to pay the costs:

(1) of the administration and operation of the

exchange; and

(2) associated with any health coverage programs

associated with the exchange.

(b) The exchange shall prepare annually a complete and

detailed written report accounting for all money received and

disbursed by the exchange during the preceding fiscal year. The

report must meet any reporting requirements provided in the General

Appropriations Act, regardless of whether the exchange receives any

money under that Act. The exchange shall submit the report to the

governor, the legislature, the commissioner, and the executive

commissioner not later than January 31 of each year.

(c) General revenue may not be appropriated for the

exchange.

Sec. 1511.154. PUBLICATION OF FINANCIAL INFORMATION. The

exchange shall publish the average costs of licensing, regulatory

fees, and any other payments required by the exchange, and the

administrative costs of the exchange, on an Internet website to

educate consumers on those costs. This information must include

information on losses due to waste, fraud, and abuse.

SUBCHAPTER E. TRUST FUND

Sec. 1511.201. TRUST FUND. (a) The exchange fund is

established as a special trust fund outside of the state treasury in

the custody of the comptroller separate and apart from all public

money or funds of this state.

(b) The exchange may deposit fees, gifts or donations, and

any federal funding obtained by the exchange in the exchange fund in

accordance with procedures established by the comptroller.

(c) Interest or other income from the investment of the fund

shall be deposited to the credit of the fund.

SECTION 2. (a) As soon as practicable after the effective

date of this Act, but not later than October 31, 2025, the governor

and lieutenant governor shall appoint the initial members of the

board of directors of the Texas Health Insurance Exchange.

(b) As soon as practicable after the appointments required

by Subsection (a) of this section are made, but not later than

November 30, 2025, the board of directors of the Texas Health

Insurance Exchange shall hold a special meeting to discuss the

adoption of rules and procedures necessary to implement Chapter

1511, Insurance Code, as added by this Act.

(c) As soon as practicable after the effective date of this

Act, but not later than July 1, 2026, the board of directors of the

Texas Health Insurance Exchange shall adopt rules and procedures

necessary to implement Chapter 1511, Insurance Code, as added by

this Act.

(d) If, after the effective date of this Act but before the

initial members of the board of directors of the Texas Health

Insurance Exchange have been appointed as required by Subsection

(a) of this section, the Texas Department of Insurance becomes

aware of any planning and establishment grants as described by

Section 1311, Patient Protection and Affordable Care Act (42 U.S.C.

Section 18031), or any other public or private funding source, the

department may apply for funding from that source.

(e) The exchange may not begin operations without adequate

funding.

(f) The initial coverage period for coverage on the exchange

may not begin before January 1, 2028.

SECTION 3. This Act takes effect immediately if it receives

a vote of two-thirds of all the members elected to each house, as

provided by Section 39, Article III, Texas Constitution. If this

Act does not receive the vote necessary for immediate effect, this

Act takes effect September 1, 2025.