Texas Administrative Code
Title 28 - INSURANCE
Part 1 - TEXAS DEPARTMENT OF INSURANCE
Chapter 11 - HEALTH MAINTENANCE ORGANIZATIONS
Subchapter AA - DELEGATED ENTITIES
Section 11.2604 - Delegation Agreements - General Requirements and Information to be Provided to HMO
Universal Citation: 28 TX Admin Code § 11.2604
Current through Reg. 50, No. 13; March 28, 2025
(a) An HMO that delegates any function required by Insurance Code Chapter 843 (concerning Health Maintenance Organizations) and Chapter 1272 (concerning Delegation of Certain Functions by Health Maintenance Organization), and other applicable insurance laws and regulations of this state to a delegated entity must execute a written agreement with that delegated entity.
(b) Written agreements must include:
(1) a provision that the delegated entity and
any delegated third parties must agree to comply with all statutes and rules
applicable to the functions being delegated by the HMO;
(2) a provision that the HMO will monitor the
acts of the delegated entity through a monitoring plan, which must be set forth
in the delegation agreement, and contain, at a minimum:
(A) provisions for the review of the
delegated entity's solvency status and financial operations, including, at a
minimum, review of the delegated entity's financial statements, consisting of
at least a balance sheet, income statement, and statement of cash flows for the
current and preceding year;
(B)
provisions for the review of the delegated entity's compliance with the terms
of the delegation agreement as well as with all applicable statutes and rules
affecting the functions delegated by the HMO under the delegation
agreement;
(C) a description of the
delegated entity's financial practices in sufficient detail that will ensure
that the delegated entity tracks and timely reports to the HMO liabilities
including incurred but not reported obligations;
(D) a method by which the delegated entity
must report monthly a summary of the total amount paid by the delegated entity
to physicians and providers under the delegation agreement; and
(E) a monthly log, maintained by the
delegated entity, of oral and written complaints from physicians, providers,
and enrollees regarding any delay in payment of claims or nonpayment of claims
pertaining to the delegated function, including the status of each
complaint;
(3) a
statement that the HMO will use the monitoring plan on an ongoing basis;
compliance with this requirement must be documented by the HMO maintaining, at
a minimum:
(A) periodic signed statements
from the individual identified by the HMO in paragraph (23) of this subsection
that the HMO has reviewed the information required in the monitoring plan;
and
(B) periodic signed statements
from the chief financial officer of the HMO acknowledging that the most recent
financial statements of the delegated entity have been reviewed;
(4) a provision establishing the
penalties to be paid by the delegated entity for failure to provide information
required by this subchapter;
(5) a
provision requiring quarterly assessment and payment of penalties under the
agreement, if applicable;
(6) a
provision that the agreement cannot be terminated without cause by the
delegated entity or the HMO without written notice provided to the other party
and the department before the 90th day preceding the termination date, provided
that the commissioner may order the HMO to terminate the agreement under §
11.2608 of this title (relating to
Department May Order Corrective Action);
(7) a provision that requires the delegated
entity, and any entity or physician or provider with which it has contracted to
perform a function of the HMO, to hold harmless an enrollee under any
circumstance, including the insolvency of the HMO or delegated entity, for
payments for covered services other than copayments and deductibles authorized
under the evidence of coverage;
(8)
a provision that the delegation agreement may not be construed to limit in any
way the HMO's responsibility, including financial responsibility, to comply
with all statutory and regulatory requirements;
(9) a provision that any failure by the
delegated entity to comply with applicable statutes and rules or monitoring
standards permits the HMO to terminate delegation of any or all delegated
functions;
(10) a provision that
the delegated entity must permit the commissioner to examine at any time any
information the department reasonably considers is relevant to:
(A) the financial solvency of the delegated
entity; or
(B) the ability of the
delegated entity to meet the entity's responsibilities in connection with any
function delegated to the entity by the HMO;
(11) a provision that the delegated entity,
in contracting with a delegated third party directly or through a third party,
will require the delegated third party to comply with the requirements of
paragraph (10) of this subsection;
(12) a provision that the delegated entity
must provide the license number of any delegated third party performing any
function that requires a license as a third party administrator under Insurance
Code Chapter 4151 (concerning Third-Party Administrators), or a license as a
utilization review agent under Insurance Code Chapter 4201 (concerning
Utilization Review Agents), or that requires any other license under the
Insurance Code or another insurance law of this state;
(13) if utilization review is delegated, a
provision stating that:
(A) enrollees will
receive notification at the time of enrollment identifying the entity that will
be performing utilization review;
(B) the delegated entity or delegated third
party performing utilization review must do so in compliance with Insurance
Code Chapter 4201 and related rules; and
(C) utilization review decisions made by the
delegated entity or a delegated third party must be forwarded to the HMO on a
monthly basis;
(14) a
provision that any agreement in which the delegated entity directly or
indirectly delegates to a delegated third party any function delegated to the
delegated entity by the HMO under Insurance Code Chapter 843 and Insurance Code
Chapter 1272 and other applicable insurance laws and regulations of this state,
including any handling of funds, must be in writing;
(15) a provision that on any subsequent
delegation of a function by a delegated entity to a delegated third party, the
executed updated agreements must be filed with the department and enrollees
must be notified of the change of any party performing a function for which
notification of an enrollee is required by this chapter or Insurance Code
Chapter 843 and Insurance Code Chapter 1272 and other applicable insurance laws
and regulations of this state;
(16)
an acknowledgment and agreement by the delegated entity that the HMO is not
prevented from requiring that the delegated entity provide any and all evidence
requested by the HMO or the department relating to the delegated entity's or
delegated third party's financial viability;
(17) a provision acknowledging that any
delegated third party with which the delegated entity subcontracts will be
limited to performing only those functions set forth and delegated in the
agreement, using standards approved by the HMO and that are in compliance with
applicable statutes and rules;
(18)
a provision that any delegated third party is subject to the HMO's oversight
and monitoring of the delegated entity's performance and financial condition
under the delegation agreement;
(19) a provision that requires the delegated
entity to make available to the HMO samples of each type of contract the
delegated entity executes or has executed with physicians and providers to
ensure compliance with the contractual requirements described by paragraphs (6)
and (7) of this subsection, except that the agreement may not require that the
delegated entity make available to the HMO contractual provisions relating to
financial arrangements with the delegated entity's physicians and
providers;
(20) a provision that
requires the delegated entity to provide information to the HMO on a quarterly
basis and in a format determined by the HMO to permit an audit of the delegated
entity and to ensure compliance with the department's reporting requirements
with respect to any functions delegated by the HMO to the delegated entity and
to ensure that the delegated entity remains solvent to perform the delegated
functions, including:
(A) a summary:
(i) describing any payment methods, including
capitation or fee for services, that the delegated entity uses to pay its
physicians and providers and any other third party performing a function
delegated by the HMO; and
(ii) of
the breakdown of the percentage of physicians and providers and any other third
party paid by each payment method listed in clause (i) of this
subparagraph;
(B) the
period that claims and any other obligations for health care filed with the
delegated entity, under this and any other delegation agreements to which the
delegated entity is a party, have been pending but remain unpaid, divided into
categories of 0-to-45 days, 46-to-90 days, and 91-or-more days. The summary
must include aggregate information for all delegation agreements entered into
by the delegated entity and information for the specific delegation agreement
entered into between the parties;
(C) the aggregate dollar amount of claims and
other obligations for health care owed by the delegated entity to any physician
or provider, including estimates for incurred but not reported
obligations;
(D) information that
the HMO requires in order to file claims for reinsurance, coordination of
benefits, and subrogation; and
(E)
documentation, except for information, documents, and deliberations related to
peer review that are confidential or privileged under Occupations Code, Chapter
160, Subchapter A, (concerning Requirements Relating to Medical Peer Review),
that relates to:
(i) any regulatory agency's
inquiry or investigation of the delegated entity or of an individual physician
or provider with whom the delegated entity contracts that relates to an
enrollee of the HMO; and
(ii) the
final resolution of any regulatory agency's inquiry or investigation;
(21) a provision
relating to enrollee complaints that requires the delegated entity to ensure
that on receipt of a complaint, as defined in Insurance Code Chapter 843 and
other applicable insurance laws and regulations of this state, a copy of the
complaint must be sent to the HMO within two business days, except that in a
case in which a complaint involves emergency care, as defined in Insurance Code
Chapter 843 and other applicable insurance laws and regulations of this state,
the delegated entity must forward the complaint immediately to the HMO,
provided that nothing in this paragraph prohibits the delegated entity from
attempting to resolve a complaint;
(22) a provision that the HMO, the delegated
entity, and any delegated third party must comply with the provisions of
Chapter 22 of this title (relating to Privacy);
(23) a provision identifying an officer of
the HMO as the representative of the HMO for all matters related to the
delegation agreement; and
(24) a
provision identifying which party to the agreement will bear the expense of
compliance with each requirement set forth in this subsection, including the
cost of any examinations performed under this subchapter.
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