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AUSTIN, Texas -- New rules for health maintenance organizations in Texas likely will mean slightly higher costs for the plans and employers.
As instructed by the 1997 Legislature, the Texas Department of Insurance has proposed new regulations governing how HMOs operate in the state. The regulations, in the form of amendments and new sections to the Texas Administrative Code, are necessary to implement 15 laws passed during last year's session.
The 222 pages of proposed rules establish what basic services must be provided by the plans, contain requirements for financial performance and set out a host of administrative duties for HMOs.
"Most assuredly, it will have some impact" on the cost of care, said Geoff Wurzel, executive director of the Texas Assn. of Health Plans in Austin. Mr. Wurzel pointed out that the rules contain "a lot of procedural and administrative requirements," and he said that the cost of implementing them will not be absorbed by the plans.
Mr. Wurzel said it is unclear how much it will cost HMOs to adhere to the regulations, and the Insurance Department has not determined the full expense of implementing the requirements.
Larry Hall, executive director of the Houston Area Health Care Coalition, said, "Any time you have mandates, you will have an increase in cost."
Mr. Hall said he made a quick review of the regulations and believes only a small increase in costs will be needed to implement the changes. "I don't know that what's in the law will break anyone," he said.
The regulations indicate that HMOs will incur some cost in providing information on the changes to enrollees.
The proposal estimates that 3.2 million Texas plan members have manuals explaining their coverage and that changes should cost about 10 cents per book, or about $320,000.
The current draft of the proposed rules comes after the Insurance Department released its first version in April. Regulators invited comments on the first proposal and considered those remarks in drafting the current proposed regulations.
The department is taking written comments until Aug. 3 on the current proposal, and a public hearing is set for Aug. 17 to discuss the regulations. After that public hearing, Insurance Commissioner Elton Bomer could say no additional changes are necessary and issue the order making the rules final. Or he could ask for changes, which would mean another public hearing would be required.
No deadline is set for final adoption.
The proposed rules require HMOs to provide some basic coverages and services. For group plans, those requirements would include:
* Treatment of chemical dependency under the same limits and terms as those for treatment of physical illnesses.
* Coverage for transplants of kidneys, corneas and bone marrow when medically necessary. Osteoporosis and serious mental illness, as defined in the state's insurance code, also must be covered.
* Direct access to obstetricians and gynecologists.
* Preventive health services, including family planning, certain infertility treatments, well-child care, prostate cancer screening, annual ear and eye exams for children under 18, and immunizations.
* Treatment of diabetes.
* Home health services, as prescribed or directed by physicians designated by the HMOs.
* Inpatient and outpatient services, including rehabilitative services and physical, speech and occupational therapy.
The proposal also contains requirements for HMOs to document certain business operations and to make the documentation available to the Insurance Department when requested.
In its draft released in April, the Insurance Department added a memo asking for comments on whether coverage should be mandated for prescription drugs, blood plasma for hemophiliacs, breast reduction operations, and the treatment of morbid obesity. Based partly on the comments it received, the department decided not to add those mandates to the proposed rules.
An Insurance Department spokesman said comments were solicited on those four coverages because they were ones regulators had received complaints about from enrollees who thought the coverages should be required.
Diane Crumley, president of Insureds Advocacy Group in Houston, said employers eventually are going to see health care costs rise if a mandate to cover obese workers is not included in the final version of the regulations.
Surgical methods that can help curb weight gain are inexpensive compared to treating illnesses such as diabetes and high blood pressure that stem from obesity, said Ms. Crumley, whose group works to persuade managed care plans and insurers to cover the procedures.
"When you look at it from a business standpoint, it is horribly costly to leave it untreated," she said of obesity.
Employers did not turn out to comment at the public hearing. A list provided by the Insurance Department indicates 20 people commented.
Doctors, attorneys, health care plan representatives and consumer advocates were listed. No employer groups or benefit managers were on the list.
Mr. Hall said employers and HMOs he has talked with haven't expressed a lot of concern with the changes. "A lot of (HMOs) are doing these things already. It's just that now it's required by law."
Mr. Wurzel said health plans can live with the proposed regulations.
After a quick review of the latest version, he said, "we feel pretty good" about the proposed rules, because they appear to reflect the intent of the laws passed in the 1997 session.
"That's not to say that we don't have some issues," Mr. Wurzel said, but "we're not ready to go into detail" until a thorough review of the proposal can be conducted.