TITLE 28. INSURANCE
PART 1. TEXAS DEPARTMENT OF INSURANCE
CHAPTER 3. LIFE, ACCIDENT, AND HEALTH INSURANCE AND ANNUITIES
The Texas Department of Insurance (TDI) proposes to amend 28 TAC §§3.205, 3.3403, 3.3703, 3.9208, and 3.9210, concerning certain participating policy forms, health coverage of newborn children, and preferred and exclusive provider benefit plans. The amendments implement House Bill 4611, 88th Legislature, 2023; House Bills 388, 1620, and 2221, 89th Legislature, 2025; and Senate Bills 493, 896, and 1236, 89th Legislature, 2025.
EXPLANATION.
Amendments to §§3.205, 3.3403, 3.3703, 3.9208, and 3.9210 are necessary to implement the following legislation.
- HB 388 requires health benefit plans to use a uniform coordination of benefits questionnaire that is adopted by TDI.
- HB 1620 revises Government Code references throughout the Insurance Code to reflect statutory amendments relating to Medicaid enacted in HB 4611, which made nonsubstantive revisions to various health and human services laws.
- HB 2221 moves requirements concerning unlawful rebates and inducements to new Insurance Code Chapter 1702.
- SB 493 prohibits certain pharmacy benefit manager contract provisions.
- SB 896 extends the enrollment period for newborn children from 31 days to 60 days.
- SB 1236 expands requirements for pharmacy benefit network contracts.
In separate proposals also published in this issue of the Texas Register , TDI proposes amendments to 28 TAC Chapters 11 and 26 to implement the previously referenced legislation. In a separate proposal published October 24, 2025 (50 TexReg 6976), TDI proposed a uniform coordination of benefits questionnaire in 28 TAC Chapter 3, Subchapter V, to implement HB 388. At a later date, TDI also plans to propose amendments to 28 TAC Chapter 21 to implement provisions in HB 2221 and SB 1236.
Descriptions of the sections' proposed amendments follow.
Section 3.205.
A proposed amendment to §3.205 replaces the reference to Insurance Code §541.056(c), which was repealed by HB 2221, with new Insurance Code §1702.102(c), which was added by HB 2221.
Section 3.3403.
The proposed amendments to §3.3403 implement SB 896. Subsections (a), (b), and (d) are amended by striking general references to "a period of time" for newborn coverage and replacing them with the concrete time period of "before the 61st day after the child's birth." Subsection (e) is amended by replacing references to a 31-day initial coverage period with a 60-day initial coverage period.
Subsections (f) - (h), addressing the original implementation period of Insurance Code §1367.003, are deleted because they are no longer relevant. Subsection (i) is redesignated as subsection (f), and a title is added to the statutory reference in the subsection to conform to agency style.
Section 3.3703.
The proposed amendments to §3.3703 implement HB 388, HB 493, and SB 1236. Subsection (a)(21) is amended by adding a reference to Insurance Code §1203.153. Consistent with SB 1236, new subsection (a)(31) requires a contract between an insurer and a pharmacy or pharmacist to comply with Insurance Code Chapter 1369. New subsection (a)(32) prohibits certain contract provisions in a contract between an insurer and a pharmacy or pharmacist, consistent with Insurance Code §4151.155 as added by SB 493. Although §4151.155 affects contracts involving a pharmacy benefit manager, subsection (a)(32) applies to contracts involving an insurer to ensure requirements for insurers and their pharmacy benefit managers are consistent. New subsection (a)(33) is added to cross-reference 28 TAC §7.1613, which addresses requirements for a contract between an issuer and a third-party administrator (TPA), including a requirement for a TPA to be contractually obligated to comply with all statutory and regulatory requirements related to a function carried out by the TPA. This makes clear that the requirements of §3.3703 apply to health plan contracts with physicians or providers, whether the plan contracts directly or relies on a TPA such as a pharmacy benefit manager to contract.
Section 3.9208.
The proposed amendment to §3.9208 replaces the reference to Government Code Chapter 533 with Government Code Chapter 540, as repealed and replaced by HB 4611, and consistent with HB 1620.
Section 3.9210. The proposed amendment to §3.9210(a) replaces the reference to Government Code Chapter 533 with Government Code Chapter 540, as repealed and replaced by HB 4611 and consistent with HB 1620.
In addition, proposed amendments include nonsubstantive editorial and formatting changes to conform the sections to TDI's current drafting style and plain language preferences, and to improve the rule's clarity. These changes appear throughout the amended sections and include adding titles to cited statutes; nonsubstantive text edits, including the addition of necessary words such as "to" and replacing the word "which" with "that"; and other grammatical, punctuational, and format changes.
FISCAL NOTE AND LOCAL EMPLOYMENT IMPACT STATEMENT.
Rachel Bowden, director of the Regulatory Initiatives Office in the Life and Health Division, has determined that during each year of the first five years the proposed amendments are in effect, there will be no measurable fiscal impact on state and local governments as a result of enforcing or administering the proposed amendments, other than that imposed by statute. Ms. Bowden made this determination because the proposed amendments do not add to or decrease state revenues or expenditures, and because local governments are not involved in enforcing or complying with the proposed amendments.
Ms. Bowden does not anticipate any measurable effect on local employment or the local economy as a result of this proposal.
PUBLIC BENEFIT AND COST NOTE.
For each year of the first five years the proposed amendments are in effect, Ms. Bowden expects that administering and enforcing the proposed amendments will have the public benefit of ensuring that TDI's rules conform to House Bills 388, 1620, 2221, and 4611, and Senate Bills 493, 896, and 1236.
Ms. Bowden expects that the proposed amendments will not increase the cost of compliance. Any costs for those required to comply with the proposed amendments are attributable to House Bills 388, 1620, 2221, and 4611; and Senate Bills 493, 896, and 1236 because the proposed amendments do not impose requirements beyond those in statute.
ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS.
TDI has determined that the proposed amendments will not have an adverse economic effect on small or micro businesses, or on rural communities. As a result, and in accordance with Government Code §2006.002(c), TDI is not required to prepare a regulatory flexibility analysis.
EXAMINATION OF COSTS UNDER GOVERNMENT CODE §2001.0045. TDI has determined that this proposal does not impose a possible cost on regulated persons. Even if it did, no additional rule amendments would be required under Government Code §2001.0045 because the proposed amendments are necessary to implement legislation. The proposed rule implements: HB 388, HB 1620, HB 2221, HB 4611, SB 493, SB 896, and SB 1236.
GOVERNMENT GROWTH IMPACT STATEMENT.
TDI has determined that for each year of the first five years that the proposed amendments are in effect, the proposed rule:
- will not create or eliminate a government program;
- will not require the creation of new employee positions or the elimination of existing employee positions;
- will not require an increase or decrease in future legislative appropriations to the agency;
- will not require an increase or decrease in fees paid to the agency;
- will not create a new regulation;
- will expand, limit, or repeal an existing regulation;
- will not increase or decrease the number of individuals subject to the rule's applicability; and
- will not positively or adversely affect the Texas economy.
TAKINGS IMPACT ASSESSMENT.
TDI has determined that no private real property interests are affected by this proposal and that this proposal does not restrict or limit an owner's right to property that would otherwise exist in the absence of government action. As a result, this proposal does not constitute a taking or require a takings impact assessment under Government Code §2007.043.
REQUEST FOR PUBLIC COMMENT.
TDI will consider any written comments on the proposal that are received by TDI no later than 5:00 p.m., central time, on June 8, 2026. Consistent with Government Code §2001.024(a)(8), TDI requests public comments on the proposal, including information related to the cost, benefit, or effect of the proposal and any applicable data, research, and analysis. Send your comments to ChiefClerk@tdi.texas.gov or to the Office of the Chief Clerk, MC: GC-CCO, Texas Department of Insurance, P.O. Box 12030, Austin, Texas 78711-2030.
The commissioner of insurance will also consider written and oral comments on the proposal in a public hearing under Docket No. 2864. This proposal will be part of a rule hearing docket that will begin at 10:00 a.m., central time, on June 1, 2026. TDI will hold the public hearing both remotely using online resources and in person at the Barbara Jordan State Office Building, 1601 Congress Avenue, Austin, Texas 78701 in Room 2.034. Visit www.tdi.texas.gov/alert/event/index.html for more info on the proposed rule, hearing, and comment submission.
SUBCHAPTER
C.
STATUTORY AUTHORITY. TDI proposes amendments to §3.205 under Insurance Code §1702.006 and §36.001.
Insurance Code §1702.006 authorizes the commissioner to adopt reasonable rules necessary to implement Insurance Code Chapter 1702.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
CROSS-REFERENCE TO STATUTE.
Section 3.205 implements Insurance Code §1702.102.
§
3.205.
This subchapter may not be construed to prohibit the use of any provision authorized by Insurance Code
§1702.102(c), concerning Prohibited Rebates and Inducements,
[
§541.056(c)
] or other applicable statute.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 2026.
TRD-202601807
Jessica Barta
General Counsel
Texas Department of Insurance
Earliest possible date of adoption: June 7, 2026
For further information, please call: (512) 676-6555
SUBCHAPTER
U.
STATUTORY AUTHORITY. TDI proposes amendments to §3.3403 under Insurance Code §1367.002 and §36.001.
Insurance Code §1367.002 states that certain provisions of Insurance Code Chapter 1201, including provisions relating to rulemaking under Insurance Code Chapter 1201, apply to Insurance Code Chapter 1367, Subchapter A.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
CROSS-REFERENCE TO STATUTE.
Section 3.3403 implements Insurance Code §1367.003.
§
3.3403.
(a)
No individual policy or group policy of accident and sickness insurance
that
[
which
] provides for accident and sickness coverage of additional newborn children may be issued in this state if it contains any provisions excluding or limiting initial coverage of a newborn infant
before the 61st day after the date of the child's birth,
[
for a period of time,
] or limitations or exclusions for congenital defects of a newborn child.
(b)
No individual policy or group policy of accident and sickness insurance
that
[
which
] provides for maternity benefits may be issued in this state if it contains any provisions excluding or limiting initial coverage of a newborn infant
before the 61st day after the date of the child's birth,
[
for a period of time,
] or limitations or exclusions for congenital defects of a newborn child.
(c)
If the policy provides accident and sickness coverage for newborn children,
the
[
such
] coverage must be at least as comprehensive as the coverage provided under the policy for other children for loss as a result of an accident or sickness.
(d)
If the policy provides maternity benefits, and included in
those
[
such
] benefits are coverages for newborn infants,
the
[
such
] policy may not contain any provision excluding or limiting initial coverage of newborn infants
before the 61st day after the date of the child's birth,
[
for a period of time,
] or limit or exclude coverage for congenital defects of a newborn child.
(e)
The initial coverage provided
to
newborn children must continue for a period of at least
60
[
31
] days. The insurer may require that before the coverage continues beyond this initial
60
[
31
]-day period, the policyholder must notify the insurer of the birth of the newborn child and pay any additional premium required to maintain the coverage in force. Any additional premium required for the initial period of coverage may be charged.
[(f) Insurance Code §1367.003 applies to all accident and sickness policies issued or issued for delivery, renewed, extended, or amended in the State of Texas on and after January 1, 1974. The insurer, upon a renewal, extension, or amendment, may charge such additional premiums as are just and reasonable for the additional risk incurred by compliance with Insurance Code §1367.003. With respect to any policy forms approved by the Texas Department of Insurance prior to the effective date of §1367.003, an insurer is authorized to achieve compliance with §1367.003 by the use of endorsements or riders provided such endorsements or riders are approved by the Texas Department of Insurance as being in compliance with Insurance Code §1367.003 and other provisions of the Texas Insurance Code.]
[(g) Insurance Code §1367.003 applies to policies written before January 1, 1974, if and when such a policy is "renewed, extended or amended" after January 1, 1974. If the provisions of a policy written before January 1, 1974, allow the insurer to renegotiate the terms of the policy after January 1, 1974, or allow the insurer to adjust the premiums charged under the policy after January 1, 1974, and if at the time such renegotiation or adjustment could be accomplished and is accomplished, the policy continues in force or a policy with substantially similar coverage is agreed to by the insured and insurer, then the policy will be said to have been "renewed, extended or amended" for purposes of Insurance Code §1367.003, and the requirements of §1367.003 will attach to the policy.]
[(h) Insurance Code §1367.003 applies to any policy except a "non-cancellable and guaranteed renewable" policy written before January 1, 1974, if such policy is "renewed, extended or amended" or a rate adjustment could be made after January 1, 1974. If a group policy is written in conjunction with a collective bargaining agreement, such policy will be considered "renewed, extended or amended" upon the expiration of any applicable collective bargaining agreement.]
(f)
[
(i)
] Nothing in this subchapter will be deemed to extend the provisions of Insurance Code §1367.003
, concerning Certain Limitations on Coverage for Newborn Children Prohibited,
to insurance contracts providing benefits only for specified diseases, pure accident policies, disability only policies, or loss of time only policies.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 2026.
TRD-202601809
Jessica Barta
General Counsel
Texas Department of Insurance
Earliest possible date of adoption: June 7, 2026
For further information, please call: (512) 676-6555
SUBCHAPTER
X.
DIVISION 1. GENERAL REQUIREMENTS
28 TAC §3.3703STATUTORY AUTHORITY. TDI proposes amendments to §3.3703 under Insurance Code §§1203.152, 1301.007, 4151.006, and 36.001.
Insurance Code §1203.152 requires the commissioner to adopt rules establishing a uniform coordination of benefits questionnaire to be used by all health benefit plan issuers in Texas.
Insurance Code §1301.007 directs the commissioner to adopt rules as necessary to implement Insurance Code Chapter 1301 and to ensure reasonable accessibility and availability of preferred provider services to Texas residents.
Insurance Code §4151.006 authorizes the commissioner to adopt rules that are fair, reasonable, and appropriate to augment and implement Insurance Code Chapter 4151.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
CROSS-REFERENCE TO STATUTE.
Section 3.3703 implements Insurance Code §1203.153 and §4151.155, and Chapter 1369.
§
3.3703.
(a)
An insurer marketing a preferred provider benefit plan must contract with physicians and health care providers to ensure that all medical and health care services and items contained in the package of benefits for which coverage is provided, including treatment of illnesses and injuries, will be provided under the plan in a manner that ensures both availability and accessibility of adequate personnel, specialty care, and facilities. Each contract must meet the following requirements
.
[
:
]
(1) A contract between a preferred provider and an insurer may not restrict a physician or health care provider from contracting with other insurers, preferred provider plans, preferred provider networks or organizations, exclusive provider benefit plans, exclusive provider networks or organizations, health care collaboratives, or HMOs.
(2) Any term or condition limiting participation on the basis of quality that is contained in a contract between a preferred provider and an insurer is required to be consistent with established standards of care for the profession.
(3)
In the case of physicians or practitioners with hospital or institutional provider privileges who provide a significant portion of care in a hospital or institutional provider setting, a contract between a preferred provider and an insurer may contain terms and conditions that include the possession of practice privileges at preferred hospitals or institutions, except that if no preferred hospital or institution offers privileges to members of a class of physicians or practitioners,
then
the contract may not provide that the lack of hospital or institutional provider privileges may be a basis for denial of participation as a preferred provider to
the
[
such
] physicians or practitioners of that class.
(4) A contract between an insurer and a hospital or institutional provider must not, as a condition of staff membership or privileges, require a physician or practitioner to enter into a preferred provider contract. This prohibition does not apply to requirements concerning practice conditions other than conditions of membership or privileges.
(5) A contract between a preferred provider and an insurer may provide that the preferred provider will not bill the insured for unnecessary care, if a physician or practitioner panel has determined the care was unnecessary, but the contract may not require the preferred provider to pay hospital, institutional, laboratory, X-ray, or like charges resulting from the provision of services lawfully ordered by a physician or health care provider, even though such service may be determined to be unnecessary.
(6) A contract between a preferred provider and an insurer may not:
(A) contain restrictions on the classes of physicians and practitioners who may refer an insured to another physician or practitioner; or
(B) require a referring physician or practitioner to bear the expenses of a referral for specialty care in or out of the preferred provider panel. Savings from cost-effective utilization of health services by contracting physicians or health care providers may be shared with physicians or health care providers in the aggregate.
(7)
A contract between a preferred provider and an insurer may not contain any financial incentives to a physician or a health care provider
that
[
which
] act directly or indirectly as an inducement to limit medically necessary services. This subsection does not prohibit the savings from cost-effective utilization of health services by contracting physicians or health care providers from being shared with physicians or health care providers in the aggregate.
(8) An insurer's contract with a physician, physician group, or practitioner must have a mechanism for the resolution of complaints initiated by an insured, a physician, physician group, or practitioner. The mechanism must provide for reasonable due process, including, in an advisory role only, a review panel selected as specified in §3.3706(b)(2) of this title (relating to Designation as a Preferred Provider, Decision to Withhold Designation, Termination of a Preferred Provider, Review of Process).
(9) A contract between a preferred provider and an insurer may not require any health care provider, physician, or physician group to execute hold harmless clauses that shift an insurer's tort liability resulting from acts or omissions of the insurer to the preferred provider.
(10)
A contract between a preferred provider and an insurer must require a preferred provider
that
[
who
] is compensated by the insurer on a discounted fee basis to agree to bill the insured only on the discounted fee and not the full charge.
(11) A contract between a preferred provider and an insurer must require the insurer to comply with all applicable statutes and rules pertaining to prompt payment of clean claims with respect to payment to the provider for covered services rendered to insureds.
(12) A contract between a preferred provider and an insurer must require the provider to comply with the Insurance Code §§1301.152 - 1301.154, which relates to Continuity of Care.
(13) A contract between a preferred provider and an insurer may not prohibit, penalize, permit retaliation against, or terminate the provider for communicating with any individual listed in Insurance Code §1301.067, concerning Interference with Relationship Between Patient and Physician or Health Care Provider Prohibited, about any of the matters set forth in the contract.
(14)
A contract between a preferred provider and an insurer conducting, using, or relying
on
[
upon
] economic profiling to terminate physicians or health care providers from a plan must require the insurer to inform the provider of the insurer's obligation to comply with Insurance Code §1301.058, concerning Economic Profiling.
(15) A contract between a preferred provider and an insurer that engages in quality assessment is required to disclose in the contract all requirements of Insurance Code §1301.059(b), concerning Quality Assessment.
(16) A contract between a preferred provider and an insurer may not require a physician to issue an immunization or vaccination protocol for an immunization or vaccination to be administered to an insured by a pharmacist.
(17) A contract between a preferred provider and an insurer may not prohibit a pharmacist from administering immunizations or vaccinations if they are administered in accordance with the Texas Pharmacy Act, Chapters 551 - 566 and Chapters 568 - 569 of the Occupations Code, and implementing rules.
(18) A contract between a preferred provider and an insurer must require a provider that voluntarily terminates the contract to provide reasonable notice to the insured, and must require the insurer to provide assistance to the provider as set forth in Insurance Code §1301.160(b), concerning Notification of Termination of Participation of Preferred Provider.
(19) A contract between a preferred provider and an insurer must require written notice to the provider on termination of the contract by the insurer, and in the case of termination of a contract between an insurer and a physician or practitioner, the notice must include the provider's right to request a review, as specified in §3.3706(d) of this title.
(20)
A contract between a preferred provider and an insurer must include provisions that will entitle the preferred provider
on
[
upon
] request to all information necessary to determine that the preferred provider is being compensated in accordance with the contract. A preferred provider may make the request for information by any reasonable and verifiable means. The information must include a level of detail sufficient to enable a reasonable person with sufficient training, experience, and competence in claims processing to determine the payment to be made according to the terms of the contract for covered services that are rendered to insureds. The insurer may provide the required information by any reasonable method through which the preferred provider can access the information, including email, computer disks, paper, or access to an electronic database. Amendments, revisions, or substitutions of any information provided in accordance with this paragraph are required to be made under subparagraph (D) of this paragraph and, when applicable subparagraph (J) of this paragraph. The insurer is required to provide the fee schedules and other required information by the 30th day after the date the insurer receives the preferred provider's request.
(A) This information is required to include a preferred provider specific summary and explanation of all payment and reimbursement methods that will be used to pay claims submitted by the preferred provider. At a minimum, the information is required to include:
(i) a fee schedule, including, if applicable, CPT, HCPCS, ICD-9-CM codes or successor codes, and modifiers:
(I) by which all claims for covered services submitted by or on behalf of the preferred provider will be calculated and paid; or
(II) that pertains to the range of health care services reasonably expected to be delivered under the contract by that preferred provider on a routine basis along with a toll-free number or electronic address through which the preferred provider may request the fee schedules applicable to any covered services that the preferred provider intends to provide to an insured and any other information required by this paragraph that pertains to the service for which the fee schedule is being requested if that information has not previously been provided to the preferred provider;
(ii) all applicable coding methodologies;
(iii) all applicable bundling processes, which are required to be consistent with nationally recognized and generally accepted bundling edits and logic;
(iv) all applicable downcoding policies;
(v) a description of any other applicable policy or procedure the insurer may use that affects the payment of specific claims submitted by or on behalf of the preferred provider, including recoupment;
(vi) any addenda, schedules, exhibits, or policies used by the insurer in carrying out the payment of claims submitted by or on behalf of the preferred provider that are necessary to provide a reasonable understanding of the information provided under this paragraph; and
(vii) the publisher, product name, and version of any software the insurer uses to determine bundling and unbundling of claims.
(B) In the case of a reference to source information as the basis for fee computation that is outside the control of the insurer, such as state Medicaid or federal Medicare fee schedules, the information provided by the insurer is required to clearly identify the source and explain the procedure by which the preferred provider may readily access the source electronically, telephonically, or as otherwise agreed to by the parties.
(C) Nothing in this paragraph may be construed to require an insurer to provide specific information that would violate any applicable copyright law or licensing agreement. However, the insurer is required to supply, in lieu of any information withheld on the basis of copyright law or licensing agreement, a summary of the information that will allow a reasonable person with sufficient training, experience, and competence in claims processing to determine the payment to be made according to the terms of the contract for covered services that are rendered to insureds as required by subparagraph (A) of this paragraph.
(D) No amendment, revision, or substitution of claims payment procedures or any of the information required to be provided by this paragraph will be effective as to the preferred provider, unless the insurer provides at least 90 calendar days' written notice to the preferred provider identifying with specificity the amendment, revision, or substitution. An insurer may not make retroactive changes to claims payment procedures or any of the information required to be provided by this paragraph. Where a contract specifies mutual agreement of the parties as the sole mechanism for requiring amendment, revision, or substitution of the information required by this paragraph, the written notice specified in this section does not supersede the requirement for mutual agreement.
(E) Failure to comply with this paragraph constitutes a violation as set forth in subsection (b) of this section.
(F) This paragraph applies to all contracts entered into or renewed on or after the effective date of this paragraph. Upon receipt of a request, the insurer is required to provide the information required by subparagraphs (A) - (D) of this paragraph to the preferred provider by the 30th day after the date the insurer receives the preferred provider's request.
(G) A preferred provider that receives information under this paragraph:
(i) may not use or disclose the information for any purpose other than:
(I) the preferred provider's practice management;
(II) billing activities;
(III) other business operations; or
(IV) communications with a governmental agency involved in the regulation of health care or insurance;
(ii) may not use this information to knowingly submit a claim for payment that does not accurately represent the level, type, or amount of services that were actually provided to an insured or to misrepresent any aspect of the services; and
(iii)
may not rely
on
[
upon
] information provided in accordance with this paragraph about a service as a representation that an insured is covered for that service under the terms of the insured's policy or certificate.
(H) A preferred provider that receives information under this paragraph may terminate the contract on or before the 30th day after the date the preferred provider receives information requested under this paragraph without penalty or discrimination in participation in other health care products or plans. If a preferred provider chooses to terminate the contract, the insurer is required to assist the preferred provider in providing the notice required by paragraph (18) of this subsection.
(I) The provisions of this paragraph may not be waived, voided, or nullified by contract.
(J) No adverse material change to a preferred provider contract will be effective as to the preferred provider unless the adverse material change is made in accordance with Insurance Code §1301.0642, concerning Contract Provisions Allowing Certain Adverse Material Changes Prohibited, to the extent applicable.
(21) An insurer may require a preferred provider to retain in the preferred provider's records updated information concerning a patient's other health benefit plan coverage , consistent with Insurance Code §1203.153, concerning Uniform Coordination of Benefits Questionnaire Required .
(22) Upon request by a preferred provider, an insurer is required to include a provision in the preferred provider's contract providing that the insurer and the insurer's clearinghouse may not refuse to process or pay an electronically submitted clean claim because the claim is submitted together with or in a batch submission with a claim that is deficient. As used in this section, the term "batch submission" is a group of electronic claims submitted for processing at the same time within a HIPAA standard ASC X12N 837 Transaction Set and identified by a batch control number. This paragraph applies to a contract entered into or renewed on or after January 1, 2006.
(23) A contract between an insurer and a preferred provider other than an institutional provider may contain a provision requiring a referring physician or provider, or a designee, to disclose to the insured:
(A)
that the physician, provider, or facility to
which
[
whom
] the insured is being referred might not be a preferred provider; and
(B)
if applicable, that the referring physician or provider has an ownership interest in the facility [
to which
] the insured is being referred
to
.
(24) A contract provision that requires notice as specified in paragraph (23)(A) of this subsection is required to allow for exceptions for emergency care and as necessary to avoid interruption or delay of medically necessary care and may not limit access to nonpreferred providers.
(25) A contract between an insurer and a preferred provider must require the preferred provider to comply with all applicable requirements of Insurance Code §1661.005, concerning Refund of Overpayment.
(26) A contract between an insurer and a facility must require that the facility give notice to the insurer of the termination of a contract between the facility and a facility-based physician or provider group that is a preferred provider for the insurer as soon as reasonably practicable, but not later than the fifth business day following termination of the contract.
(27) A contract between an insurer and a preferred provider must require, except for instances of emergency care as defined under Insurance Code §1301.0053, concerning Exclusive Provider Benefit Plans: Emergency Care and §1301.155(a), concerning Emergency Care, that a physician or provider referring an insured to a facility for surgery:
(A) notify the insured of the possibility that out-of-network providers may provide treatment and that the insured can contact the insurer for more information;
(B) notify the insurer that surgery has been recommended; and
(C) notify the insurer of the facility that has been recommended for the surgery.
(28) A contract between an insurer and a facility must require, except for instances of emergency care as defined under Insurance Code §1301.0053 and §1301.155(a), that the facility, when scheduling surgery:
(A) notify the insured of the possibility that out-of-network providers may provide treatment and that the insured can contact the insurer for more information; and
(B) notify the insurer that surgery has been scheduled.
(29) A contract between an insurer and a preferred provider must comply with Insurance Code §1458.101, concerning Contract Requirements, to the extent applicable.
(30) A contract between an insurer and a preferred provider that is an optometrist or therapeutic optometrist must comply with Insurance Code Chapter 1451, Subchapter D, concerning Access to Optometrists Used Under Managed Care Plan.
(31) A contract between an insurer and a pharmacy or pharmacist must comply with Insurance Code Chapter 1369, concerning Benefits Related to Prescription Drugs and Devices and Related Services.
(32) A contract between an insurer and a pharmacy or pharmacist may not include a provision that is prohibited under Insurance Code §4151.155, concerning Certain Disclosures and Communications by Pharmacist of Pharmacy Protected.
(33) A contract between an insurer and a third-party administrator, including a pharmacy benefit manager, must comply with §7.1613 of this title (relating to Written Agreements Between Administrators and Insurers).
(b) In addition to all other contract rights, violations of these rules will be treated for purposes of complaint and action in accordance with Insurance Code Chapter 542, Subchapter A, concerning Unfair Claim Settlement Practices, and the provisions of that subchapter will be employed to the extent practicable, as it relates to the power of the department, hearings, orders, enforcement, and penalties.
(c) An insurer may enter into an agreement with a preferred provider organization, an exclusive provider network, or a health care collaborative for the purpose of offering a network of preferred providers, provided that it remains the insurer's responsibility to:
(1) meet the requirements of Insurance Code Chapter 1301, concerning Preferred Provider Benefit Plans, and this subchapter;
(2) ensure that the requirements of Insurance Code Chapter 1301 and this subchapter are met; and
(3) provide all documentation to demonstrate compliance with all applicable rules on request by the department.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 2026.
TRD-202601812
Jessica Barta
General Counsel
Texas Department of Insurance
Earliest possible date of adoption: June 7, 2026
For further information, please call: (512) 676-6555
SUBCHAPTER
KK.
STATUTORY AUTHORITY. TDI proposes amendments to §3.9208 and §3.9210 under Insurance Code §36.001.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
CROSS-REFERENCE TO STATUTE.
Sections 3.9208 and 3.9210 implement HB 1620 and HB 4611.
§
3.9208.
An issuer is subject to the same network accessibility and availability requirements as outlined in §11.1607 of this title (relating to Accessibility and Availability Requirements). Issuers must comply with this section; any requirements under a Medicaid contract, subject to Government Code[
,
] Chapter
540, concerning Medicaid Managed Care Program
[
533
]; and any other applicable law.
§
3.9210.
(a)
Complaints System. Issuers must comply with this section; any requirements under a Medicaid contract, subject to Government Code[
,
] Chapter
540, concerning Medicaid Managed Care Program
[
533
]; and any other applicable law. The complaint system must provide reasonable procedures for the resolution of oral and written complaints initiated by insureds or providers concerning health care services, including a process for the notice and appeal of complaints.
(1)
If a complainant notifies the issuer orally or in writing of a complaint, the issuer, not later than the fifth business day after the date of the receipt of the complaint,
must
[
shall
] send to the complainant a letter acknowledging the date of receipt of the complaint that includes a description of the organization's complaint procedures and time frames. If the complaint is received orally, the issuer
must
[
shall
] also enclose a one-page complaint form. The one-page complaint form must prominently and clearly state that the complaint form must be returned to the issuer for prompt resolution of the complaint.
(A)
The issuer
must
[
shall
] investigate each oral and written complaint received in accordance with its policies and in compliance with this subchapter.
(B)
Investigation and resolution of complaints concerning emergencies or denials of continued stays for hospitalization
must
[
shall
] be concluded in accordance with the medical or dental immediacy of the case and may not exceed one business day from receipt of the complaint.
(C) For all other complaints, the total time for acknowledgment, investigation, and resolution of the complaint by the issuer may not exceed 30 calendar days after the date the issuer receives the written complaint or one-page complaint form from the complainant.
(D)
After the issuer has investigated a complaint, the issuer
must
[
shall
] send a response letter to the complainant explaining the issuer's resolution of the complaint within the time frame as set forth in this section. The letter must include a statement of the specific medical and contractual reasons for the resolution and the specialization of any health care provider consulted. The response letter must contain a full description of the process for appeal, including the time frames for the appeal process and the time frames for the final decision on the appeal.
(2)
If the complaint is not resolved to the satisfaction of the complainant, the issuer
must
[
shall
] provide an appeals process that includes the right of the complainant
to
either [
to
] appear in person before a complaint appeal panel at a location where the insured normally receives health care services, unless another site is agreed to by the complainant, or to address a written appeal to the complaint appeal panel. The issuer
must
[
shall
] complete the appeals process under this section not later than the 30th calendar day after the date of the receipt of the written request for appeal.
(A)
The issuer
must
[
shall
] send an acknowledgment letter to the complainant not later than the fifth business day after the date of receipt of the written request for appeal.
(B)
The issuer
must
[
shall
] appoint members to the complaint appeal panel, which
must
[
shall
] advise the issuer on the
dispute's
resolution [
of the dispute
]. The complaint appeal panel
must
[
shall
] be composed of equal numbers of issuer staff, physicians or [
other
] providers, and insureds. Each member on the complaint appeal panel must not have been previously involved in the disputed decision. The health care providers must have experience in the area of care that is in dispute and must be independent of any health care provider
that
[
who
] made any prior determination. If specialty care is in dispute,
then
the appeal panel must include a person who is a specialist in the field, or related field, of care [
to which
] the appeal relates
to
. Panel members
who
[
that
] are insureds may not be
the issuer's
employees [
of the issuer
].
(C)
Not later than the fifth business day before the scheduled meeting of the panel, unless the complainant agrees otherwise, the issuer
must
[
shall
] provide to the complainant or the complainant's designated representative:
(i) any documentation to be presented to the panel by the issuer staff;
(ii) the specialization of any health care providers consulted during the investigation; and
(iii) the name and affiliation of each issuer representative on the panel.
(D) The complainant, or designated representative if the insured is a minor or disabled, is entitled to:
(i) appear in person before the complaint appeal panel;
(ii) present alternative expert testimony; and
(iii) request the presence of and question any person responsible for making the prior determination that resulted in the appeal.
(b) Notice of the final decision of the issuer on the appeal must include a statement of the specific contractual and clinical criteria used to reach the final decision. The notice must also include the toll-free telephone number and the address of the Texas Department of Insurance.
(c) In compliance with Chapter 21, Subchapter Q , of this Title (relating to Complaint Records to be Maintained), the issuer shall maintain a record of each complaint and any complaint proceeding and any actions taken on a complaint for three years from the date of the receipt of the complaint. The record must include complaints relating to limited provider networks. A complainant is entitled to a copy of the record on the applicable complaint and any complaint proceeding.
(1)
Each issuer
must
[
shall
] maintain a complaint and appeal log regarding each complaint.
(2)
Each issuer
must
[
shall
] maintain documentation on each complaint received and the action taken on each complaint until the third anniversary of the date of receipt of the complaint. The Texas Department of Insurance may review documentation maintained under this subsection, including original documentation, during any investigation of the issuer.
(d) The commissioner may examine the complaint system for compliance with this subchapter and may require the issuer to make necessary corrections.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 2026.
TRD-202601815
Jessica Barta
General Counsel
Texas Department of Insurance
Earliest possible date of adoption: June 7, 2026
For further information, please call: (512) 676-6555
CHAPTER 5. PROPERTY AND CASUALTY INSURANCE
SUBCHAPTER
Q.
DIVISION 4. APPRAISAL REQUIREMENTS
28 TAC §§5.9800 - 5.9806The Texas Department of Insurance (TDI) proposes new 28 TAC §§5.9800 - 5.9806, concerning requirements for appraisals, in new Division 4. Sections 5.9800 - 5.9806 implement Senate Bill 458, 89th Legislature, 2025.
EXPLANATION. New §§5.9800 - 5.9806 are necessary to implement SB 458, which added new Insurance Code Chapter 1813, concerning Appraisal of Disputed Losses. SB 458 requires certain insurers writing personal automobile or residential property insurance to include an appraisal provision that complies with Insurance Code Chapter 1813 in an insurance policy delivered, issued for delivery, or renewed in Texas. New Insurance Code §1813.002 directs the commissioner to adopt rules necessary to implement the chapter, including rules that mandate appraisal and establish the period in which appraisal must be completed. The statute also directs the commissioner to consider the qualifications and selection of appraisers and umpires in adopting rules.
Sections 5.9800 - 5.9806 are added to new Division 4, which addresses the appraisal process for both personal automobile and residential property insurance and the notice insurers must send to a policyholder informing them of their right to appraisal. The requirements and conditions in Division 4 do not prohibit appraisal provisions from including other requirements or conditions that do not limit and are not contrary to Insurance Code Chapter 1813 and Division 4. Any other requirements and conditions remain subject to other applicable Texas laws, such as the standards for forms subject to filing and approval under Insurance Code Chapter 2301, Subchapter A.
To provide enough time for insurers to comply with these changes, TDI proposes to make September 1, 2026, the deadline to implement the new requirements. This proposed compliance date will give insurers ample time to amend the appraisal provisions in automobile and homeowners insurance policies and to draft and incorporate the appraisal process notice into their claims-handling process. In addition, it gives insurers time to file the amended policy forms with TDI for review and approval before September 1, 2026.
TDI received comments on an informal draft posted on September 22, 2025. TDI considered those comments when drafting this proposal.
Descriptions of the proposed new sections follow.
New §5.9800. This section describes the purpose and scope of new Division 4, relating to Appraisal Requirements. Subsection (a) states that the purpose of Division 4 is to implement Insurance Code Chapter 1813. Subsections (b) and (c) provide the applicability of Division 4, consistent with Insurance Code §1813.001, and state that Division 4 applies to personal automobile and residential property insurance delivered, issued for delivery, or renewed on or after September 1, 2026.
New §5.9801. This section provides definitions for use in new Division 4, including definitions of appraisal, appraisal provision, appraisal award, appraiser, party, personal automobile insurance, residential property insurance, and umpire.
The definition of "appraisal" refers to the process to resolve disputes about the amount of loss as described in Insurance Code Chapter 1813, and the definition of "appraisal provision" refers to the policy provision that provides for appraisal required under Chapter 1813.
The definition of "appraisal award" specifies that the determination of the amount of loss is signed by both appraisers or one appraiser and the umpire. Consistent with a typical appraisal provision, the umpire cannot unilaterally determine the amount of loss.
The definition of "party" means the insurer or the policyholder.
The definitions of "personal automobile insurance" and "residential property insurance" align with the description of those terms in Insurance Code §2301.051, helping to ensure clear and consistent application of these rules.
"Appraiser" and "umpire" are defined similarly to mean an individual who is qualified to act as an appraiser or umpire under Division 4 and who is hired or otherwise selected or appointed to participate in the appraisal process.
New §5.9802. This section outlines the general requirements for appraisal provisions required in certain insurance policies under Insurance Code Chapter 1813. These requirements do not prohibit appraisal provisions from including other requirements or conditions that do not limit and are not contrary to Insurance Code Chapter 1813 and new Division 4. Any other requirements and conditions remain subject to other applicable Texas laws, such as the standards for forms subject to filing and approval under Insurance Code Chapter 2301, Subchapter A.
This section also requires every policy subject to Insurance Code Chapter 1813 to include an appraisal provision that meets the standards outlined in paragraphs (1) - (6) of the section. Under paragraph (1), applicable policies must contain an appraisal provision that states either party has the right to unilaterally demand appraisal. Permitting either party to invoke appraisal is consistent with SB 458, which mandates that certain automobile and homeowners insurance policies include an appraisal provision. Requiring both parties to consent to appraisal before it is executed would frustrate the purpose of SB 458.
Under paragraph (2), the ability to demand appraisal must not be conditioned on the parties reaching an impasse. As described in Insurance Code §1813.003, the appraisal provision is intended to provide a dispute resolution process when the amount of loss is in dispute. A dispute indicates disagreement between the parties and does not require the parties to show that there is no chance of reaching an agreement. Paragraph (2) does not prevent an insurer from requiring proof of loss, consistent with Insurance Code Chapter 542, Subchapter B.
Paragraph (3) clarifies that appraisal is available for partial and total losses. Appraisal is not limited to total losses; it is also available for damaged property that only requires repair.
Paragraph (4) aligns with Insurance Code §1813.004 to clarify that an appraisal provision must require the appraisal award to be binding as to the amount of loss unless it was made without authority; was not made in substantial compliance with the appraisal provision; or there was fraud, or a material mistake relevant to the appraisal.
Paragraph (5) requires appraisal provisions to state the deadlines and process for appraisal. Deadlines must include the specific amounts of time listed in new §5.9805 and §5.9806 and be consistent with the other requirements in Division 4. The time limits and deadlines in new §5.9805 and §5.9806 provide a consistent and reliable basic timeframe for the appraisal process. For example, paragraph (5) ensures that every residential property policy subject to Insurance Code Chapter 1813 will give the policyholder one year to demand appraisal after the notice required under Insurance Code §542.056 is provided. It also gives the parties flexibility to agree to modify deadlines after a claim is made and the notice of acceptance or rejection under Insurance Code §542.056 has been provided. For example, after the notice is provided, the parties could agree to shorten the amount of time for the appraisers to reach an agreement on the amount of loss because the loss at issue is relatively simple. Paragraph (5) does not prohibit an appraisal provision from having additional deadlines.
Paragraph (6) clarifies that appraisal provisions must not conflict with new Division 4 or other Texas law, such as the policy form standards in Insurance Code Chapter 2301, Subchapter A.
New §5.9803. This section outlines the information that must be included in an appraisal process notice to policyholders. Subsection (a) requires an insurer to provide an appraisal process notice to the policyholder at the same time the insurer provides the notice of acceptance or rejection of the claim required under Insurance Code §542.056. The insurer may add the information required under subsection (b) to the notice sent under Insurance Code §542.056. Insurers may also choose to create a separate notice containing the information required under new §5.9803 and provide it to the policyholder at the same time as the notice required under Insurance Code §542.056.
Findings in TDI's 2024 Appraisal Experience Data Call Report (available at www.tdi.texas.gov/reports/pc/documents/2024-appraisal-experience-data-call-report.pdf) indicate that appraisal is demanded in only a small percentage of claims. Policyholders are unlikely to be familiar with how appraisal works and might not be aware of the availability of appraisal to resolve a dispute about the amount of loss. Policyholders should be made aware of appraisal and receive basic information about how it works when an insurer notifies the policyholder of the acceptance or rejection of a claim.
Subsection (b) requires the appraisal process notice to be written in plain language and appear in at least 10-point type, and explain:
- where the appraisal provision is located in the policy contract;
- how the policyholder may demand appraisal, including where to send the demand and what information the demand should include;
- the policyholder's responsibilities in the appraisal process;
- how the policyholder may request appointment of an umpire if the appraisers fail to jointly choose the umpire within the time provided, including how to request judicial appointment of an umpire;
- the applicable time limits in the appraisal process, including certain minimum information regarding deadlines; and
- the effect of the appraisal award.
New §5.9804. This section outlines the minimum qualifications that an appraiser or umpire must possess for appraisals subject to Insurance Code Chapter 1813 and new Division 4. Under subsection (a), all appraisers and umpires must meet the minimum qualifications, including (1) competency to evaluate the type of loss in the dispute, (2) independence from the parties, and (3) disinterest in the appraisal's outcome. A competency element is a long-standing, standard feature in personal automobile and residential property appraisal provisions, including in promulgated Texas personal automobile and homeowners policies. Likewise, independence from the parties is a common element in many appraisal provisions, including in promulgated Texas homeowners policies. Appraiser and umpire disinterest in the outcome is also preferred. It prevents appraisers from having a particular pecuniary interest in the outcome, ensuring an appraisal's fairness and trustworthiness as a dispute resolution tool.
Under subsection (b), appraisers and umpires in a residential property appraisal that involves loss to a dwelling must also be (1) an adjuster or public adjuster or public adjuster with experience or training in estimating residential property losses; (2) an engineer or architect with experience or training in residential construction or repair, investigating residential property damage, or estimating residential property losses; or (3) an individual who otherwise has occupational experience or training in constructing or repairing the type of damaged property at issue or estimating the type of property loss at issue. Specifying particular experience or training for appraisal of loss to a dwelling helps ensure that only properly qualified individuals participate and increases consistency in the market.
Because the section outlines only the minimum qualifications of an appraiser or umpire, appraisal provisions may establish additional or more specific qualifications as long as those provisions do not conflict with Division 4. This added flexibility reflects that loss disputes of this nature can vary significantly, such as the variation in the type and extent of property at issue; insurers can decide whether more nuanced qualifications may be appropriate.
New §5.9805. This section specifies requirements for the appraisal process under residential property insurance policies.
Subsection (a)(1) specifies that, except as provided in subsection (a)(2), an appraisal demand must be made in writing not later than one year after the insurer notifies the policyholder of acceptance or rejection of the claim as required under Insurance Code §542.056. Establishing the period to complete appraisal includes addressing the time that appraisal must begin. The one-year time limit to demand appraisal strikes a balance between giving time for a party to identify a disagreement about the amount of loss while ensuring appraisal is begun in a reasonable amount of time.
According to findings in the Appraisal Experience Data Call Report, while appraisal was used in only a small percentage of residential property claims, it was almost always initiated by the claimant, i.e., the policyholder. Most policyholders are likely unfamiliar with appraisal even though it is an important dispute resolution tool, so it is reasonable to favor a relatively long deadline to demand appraisal. According to the Appraisal Experience Data Call Report, approximately 90% of residential property appraisals were demanded within 11 months after the claim was filed. For the vast majority of claims, a one-year time limit from the date an insurer provides the notice required under Insurance Code §542.056 should be sufficient time for parties to evaluate whether to use appraisal. Using the notice required under Insurance Code §542.056 as a timing trigger provides a clear, consistent, well-established marker in the claim settlement process.
Subsection (a)(2) provides that if a lawsuit is filed concerning the loss at issue, the respondent to the lawsuit must have 30 days to demand appraisal. Subsection (a)(2) preserves the ability of a responding party to initiate appraisal even if the deadline in subsection (a)(1) has passed. Appraisal can be a more affordable and efficient dispute resolution process than litigation when an amount of loss is in dispute, so preserving the ability to initiate appraisal is beneficial.
Subsection (b) outlines other procedures and deadlines for residential property appraisal, including the deadlines to hire an appraiser, choose an umpire, and attempt to agree on the amount of loss. An appraisal award ordinarily represents the completion of appraisal. Because an appraisal award requires either both appraisers or the umpire and one of the appraisers to agree on an amount of loss, setting deadlines fundamentally helps establish the time in which appraisal must be completed.
Under subsection (b)(1), each party must hire an appraiser and provide the other party with the appraiser's name and contact information in writing within 20 days after written demand for appraisal is made. This prevents undue delay and is consistent with many appraisal provisions, including those in promulgated Texas homeowners policies.
Subsection (b)(2) requires appraisers to jointly choose an umpire and requires the appraisal provision to use one of the two deadline options in subparagraphs (A) and (B) for when umpire selection must occur. The first option requires the appraisers to choose an umpire not later than 15 days after the requirements in subsection (b)(1) are completed. This is a common deadline used in many appraisal provisions, including those in promulgated Texas homeowners policies. The second option requires the appraisers to choose an umpire not later than 15 days after the appraisers cannot agree on the amount of loss in dispute within the time under subsection (b)(4). The second option is an alternative for insurers that might prefer to have an appraisal provision that allows appraisers to wait to see whether they can agree on the amount of loss before choosing an umpire. The two options give insurers flexibility to establish when the umpire selection should occur during the appraisal process.
For circumstances in which the appraisers fail to choose an umpire within the deadlines described in proposed subsection (b)(2)(A) and (B), subsection (b)(3) states the required and permitted methods of umpire selection. Under subsection (b)(3)(A), an appraisal provision must allow either party to request judicial appointment of an umpire through a county or district where the residential property is located. Judicial appointment is the method many residential property appraisal provisions use, including in promulgated Texas homeowners policies, if the appraisers cannot agree on an umpire. Appraisal is a binding dispute resolution process that can offer an alternative to litigation, so it is reasonable to require appraisal provisions to have a judicial appointment option if there is a disagreement over who should be the umpire.
Subsection (b)(3)(B) authorizes insurers to include, in addition to judicial appointment, other methods of umpire appointment in an appraisal provision. Some residential property appraisal provisions currently provide for the umpire to be chosen by an independent vendor if the appraisers cannot agree. Subsection (b)(3)(B)(i) allows an insurer to provide an option for umpire appointment by an independent vendor that offers umpire selection services, but the insurer must include at least two vendors and let the policyholder select the vendor, or allow only the policyholder to invoke this option. Subsection (b)(3)(B)(ii) allows an insurer to provide umpire appointment through any alternative method that both parties mutually agree to in writing after appraisal has been demanded. By allowing these options in addition to judicial appointment, the proposed rule gives insurers added flexibility and efficiency in the appointment process while still ensuring a level of policyholder choice, regardless of the method.
Subsection (b)(3)(C) requires a party requesting umpire appointment through judicial appointment or by independent vendor to give written notice to the other party at least 10 days before making the request and, for judicial-appointment purposes, requires the written notice to include the location and identity of the court. Subsection (b)(3)(D) also requires the party requesting appointment to provide the other party with a copy of the request before or when the request is submitted. Subparagraphs (C) and (D) in subsection (b)(3) ensure that both parties are aware of an umpire appointment request.
Subsections (b)(4) and (5) outline the deadlines for attempting to agree on the amount of loss in dispute during appraisal. Under subsection (b)(4), appraisers must attempt to agree within 120 days after the appraisal demand was made. The 120-day deadline strikes a balance between providing time for the appraisers to attempt to agree on the amount of loss while ensuring that appraisal is completed in a reasonable amount of time. Findings in the Appraisal Experience Data Call Report indicate that about 75% of residential property appraisal awards that did not involve an umpire were made within 120 days after appraisal was demanded.
Under subsection (b)(5), where appraisers are unable to agree and an umpire is involved, the appraisers must submit their differences to the umpire and each other. An appraisal award must be issued not later than 240 days after the appraisal demand was made. Appraisal provisions, including those in promulgated Texas homeowners policies, commonly require appraisers to submit their differences to an umpire if the appraisers cannot agree on an amount of loss. According to the Appraisal Experience Data Call Report, 75% of residential property appraisal awards involving an umpire were made within 278 days after appraisal was demanded, and 50% were made within 193 days. The proposed 240-day deadline strikes a balance between completing appraisal in a timely manner and the need to give the umpire sufficient time to evaluate the loss, examine the differences, and attempt to agree on the amount of loss with at least one of the appraisers. Subject to subsection (c), if the appraisal award is not issued by the 240-day deadline, then the umpire's engagement is terminated on that date, and the appraisers must choose a new umpire within 15 days after the deadline passes.
Subsection (c) authorizes parties to modify any deadline in the appraisal process by written agreement after the appraisal process notice is provided under §5.9803. This gives the parties flexibility to adjust the timeframe after a loss occurs, allowing them to tailor it to the relative breadth and complexity of the loss at issue.
Section 5.9806. This section specifies requirements for the appraisal process under personal automobile insurance policies.
Subsection (a)(1) specifies that except as provided in subsection (a)(2), an appraisal demand must be made in writing not later than 120 days after the insurer notifies the policyholder of acceptance or rejection of a claim as required under Insurance Code §542.056. Establishing the period to complete appraisal reasonably includes addressing the time in which appraisal must begin. The 120-day deadline to demand appraisal strikes a balance between giving time for a party to identify a disagreement about the amount of loss while ensuring appraisal is begun in a reasonable amount of time.
According to findings in the Appraisal Experience Data Call Report, while appraisal was used in only a small percentage of personal automobile claims, it was almost always initiated by the claimant, i.e., the policyholder. Because most policyholders are likely unfamiliar with the appraisal process, even though it is an important dispute resolution tool, it is reasonable to favor a relatively long deadline to demand appraisal. According to the Appraisal Experience Data Call Report, over 90% of personal automobile appraisals were demanded within 120 days after the claim was filed. For the vast majority of claims, a 120-day deadline from the date an insurer provides the notice required under Insurance Code §542.056 should be sufficient time for parties to evaluate whether to use appraisal. Using the notice required under Insurance Code §542.056 as a timing trigger provides a clear, consistent, well-established marker in the claim settlement process.
Subsection (a)(2) provides that if a lawsuit is filed concerning the loss at issue, the respondent to the lawsuit must have 30 days to demand appraisal. Subsection (a)(2) preserves the ability of a responding party to initiate appraisal in case the deadline in subsection (a)(1) has passed. Appraisal can be a more affordable and efficient dispute resolution process than litigation when an amount of loss is in dispute, so preserving the ability to initiate appraisal is beneficial.
Subsection (b) outlines other procedures and deadlines for personal automobile appraisal, including the deadlines to hire an appraiser, choose an umpire, and attempt to agree on the amount of loss. An appraisal award ordinarily represents the completion of appraisal. Because an appraisal award requires either both appraisers or the umpire and one of the appraisers to agree on an amount of loss, setting deadlines fundamentally helps establish the time in which appraisal must be completed.
Under subsection (b)(1), each party must hire an appraiser and provide the other party with the appraiser's name and contact information in writing within 20 days after written demand for appraisal is made. While many appraisal provisions do not specify a deadline to select an appraiser, setting a 20-day deadline will help ensure that appraisers are identified and able to begin efforts to agree on the amount of loss in a timely manner.
Subsection (b)(2) requires appraisers to jointly choose an umpire and requires the appraisal provision to use one of the two deadline options in subparagraphs (A) and (B) for when umpire selection must occur. The first option in subsection (b)(2)(A) requires the appraisers to choose an umpire not later than 15 days after the requirements in subsection (b)(1) are completed. The second option in subsection (b)(2)(B) requires the appraisers to choose an umpire not later than 15 days after the appraisers cannot agree on the amount of loss in dispute within the time under subsection (b)(4). While many personal auto appraisal provisions do not specify a deadline to choose an umpire, setting a 15-day deadline will help ensure that an umpire is identified and able to begin efforts to resolve the appraisal in a timely manner if the appraisers cannot agree on the amount of loss. The two options give insurers flexibility to establish when the umpire selection should occur during the appraisal process.
For circumstances in which the appraisers fail to choose an umpire within the deadlines described in proposed subsection (b)(2)(A) and (B), subsection (b)(3) states the required and permitted methods of umpire selection. Under subsection (b)(3)(A), an appraisal provision must allow either party to request judicial appointment of an umpire through a county or district court where the residential property is located. Appraisal is a binding dispute resolution process that can offer an alternative to litigation, so it is reasonable to require appraisal provisions to have a judicial appointment option if there is a disagreement over who should be the umpire.
Subsection (b)(3)(B) authorizes insurers to include, in addition to judicial appointment, other methods of umpire appointment in an appraisal provision. Subsection (b)(3)(B)(i) allows an insurer to provide an option for umpire appointment by an independent vendor that offers umpire selection services, but the insurer must include at least two vendors and let the policyholder select the vendor, or allow only the policyholder to invoke this option. Subsection (b)(3)(B)(ii) allows an insurer to provide umpire appointment through any alternative method that both parties mutually agree to in writing after appraisal has been demanded. By allowing these options in addition to judicial appointment, the proposed rule gives insurers the ability to increase flexibility and, potentially, efficiency of the appointment process and still ensures a level of policyholder choice regardless of the method.
Subsection (b)(3)(C) requires a party requesting umpire appointment through judicial appointment or by independent vendor to give written notice to the other party at least 10 days before making the request and, for purposes of judicial appointment, requires the written notice to include the location and identity of the court. Subsection (b)(3)(D) also requires the party requesting appointment to provide the other party with a copy of the request before or when the request is submitted. Subsections (b)(3)(C) and (D) ensure that both parties are aware of an umpire appointment request.
Subsections (b)(4) and (5) outline the deadlines for attempting to agree on the amount of loss in dispute during appraisal. Under subsection (b)(4), appraisers must attempt to agree within 40 days after the appraisal demand was made. The 40-day deadline strikes a balance between providing time for the appraisers to attempt to agree on the amount of loss while ensuring that appraisal is completed in a reasonable amount of time. Findings in the Appraisal Experience Data Call Report indicate that over 75% of personal automobile appraisal awards that did not involve an umpire were made within 40 days after appraisal was demanded.
Under subsection (b)(5), where appraisers are unable to agree and an umpire is involved, the appraisers must submit their differences to the umpire and each other. An appraisal award must be issued not later than 180 days after the appraisal demand was made. Appraisal provisions, including those in the promulgated Texas personal automobile policy, commonly require appraisers to submit their differences to an umpire if the appraisers cannot agree on an amount of loss. According to the Appraisal Experience Data Call Report, 75% of personal automobile appraisal awards that involved an umpire were made within 210 days after appraisal was demanded, and 50% were made within 114 days. Setting a 180-day deadline strikes a balance between completing appraisal in a timely manner and the need to give the umpire sufficient time to evaluate the loss, examine the differences, and attempt to agree on the amount of loss with at least one of the appraisers. Subject to subsection (c), if the appraisal award is not issued by the 180-day deadline, then the umpire's engagement is terminated on that date, and the appraisers must choose a new umpire within 15 days after the deadline passes.
Subsection (c) authorizes parties to modify any deadline in the appraisal process by written agreement after the appraisal process notice is provided under §5.9803. This gives the parties flexibility to adjust the timeframe after a loss occurs, allowing them to tailor it to the relative breadth and complexity of the loss at issue.
FISCAL NOTE AND LOCAL EMPLOYMENT IMPACT STATEMENT. David Muckerheide, assistant director of the Property and Casualty Lines Office, has determined that during each year of the first five years the proposed new sections are in effect, there will be no measurable fiscal impact on state and local governments as a result of enforcing or administering the new sections, other than that imposed by statute. Mr. Muckerheide made this determination because the proposed new sections do not add to or decrease state revenues or expenditures, and because local governments are not involved in enforcing or complying with the proposed new sections.
Mr. Muckerheide does not anticipate any measurable effect on local employment or the local economy as a result of this proposal.
PUBLIC BENEFIT AND COST NOTE. For each year of the first five years the proposed new sections are in effect, Mr. Muckerheide expects that administering them will have the public benefit of ensuring that TDI's rules conform with Insurance Code Chapter 1813, as added by SB 458. In addition, the new sections will benefit personal automobile and residential property policyholders by creating consistent timeframes and minimum standards for appraisal provisions and processes, and by ensuring they are made aware of the right to demand appraisal. Policyholders and insurers will also benefit from having reasonable deadlines to help promote the timely completion of appraisals, and from having required appraisal provisions in policies because appraisal can be cheaper, more efficient, and a timelier dispute resolution option than litigation.
Mr. Muckerheide expects that the proposed new sections will impose an economic cost on persons required to comply with the new sections.
Costs. TDI anticipates that implementing the proposed new sections will result in costs to insurers when updating personal automobile and residential property insurance policy forms and notices to comply with the proposed requirements. The cost to comply will vary depending on the contents of an insurer's appraisal provision, the insurer's operations, and how the insurer chooses to implement the notice requirements under new §5.9805. While it is not feasible to determine the actual time required or the cost of employees needed to comply with the requirements, TDI estimates that updating appraisal provision language and drafting the appraisal process notice to policyholders will take a range of three to five hours to complete and might require an attorney. According to the May 2024 Bureau of Labor Statistics Occupational Employment and Wage Statistics at www.bls.gov/oes/current/oes_nat.htm, the national mean hourly wage for the "Lawyers" classification is $87.86.
Depending on how insurers choose to implement the appraisal process notice to policyholders under new §5.9803, TDI anticipates that incorporating updated language into insurers' existing policy and notice form templates, filing updated policy forms with TDI, and updating policy and claim administration systems will take a range of five to 15 hours to complete and will likely require both software programming and clerical staff. According to the May 2024 Bureau of Labor Statistics Occupational Employment and Wage Statistics at www.bls.gov/oes/current/oes_nat.htm, the national mean hourly wage for the "Software and Web Developers, Programmers, and Testers" classification is $65.34, and the national mean hourly wage for the "Secretaries and Administrative Assistants, Except Legal, Medical, and Executive" classification is $25.03.
TDI anticipates there may be printing, copying, mailing, and transmitting costs associated with providing updated forms to policyholders at renewal and updated notice forms to policyholders when a claim is accepted or rejected. It may require clerical staff to implement these printing, copying, mailing, and transmission efforts. It is not possible for TDI to estimate the total increased printing, copying, mailing, and transmitting costs related to compliance with this proposal because there are many factors involved that TDI cannot quantify. For example, an insurer might conduct business with its policyholders electronically and would not incur printing, copying, mailing, or transmitting costs. Insurers are more capable of accurately estimating any costs they will incur to comply.
Factors mitigating costs. Because insurers were required to have an appraisal provision in their personal automobile and residential property insurance policy forms delivered, issued for delivery, or renewed on or after January 1, 2026, TDI anticipates that the updates required to comply with the new sections should be less burdensome to implement. In addition, TDI proposes delaying the date that insurers must begin complying with the new rule requirements to September 1, 2026, so insurers have additional time to implement the new requirements.
New §5.9803 permits insurers to choose how to comply with the appraisal process notice to policyholders. Insurers may choose to incorporate the appraisal process notice information into the notice of acceptance or rejection required under Insurance Code §542.056 or provide a separate appraisal process notice to policyholders at the same time the notice under Insurance Code §542.056 is sent. If insurers choose to incorporate the information into the notice of acceptance or rejection, then insurers may incur lower printing, copying, mailing, and transmitting costs.
ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS. TDI has determined that the proposed new sections may have an adverse economic effect on small or micro businesses. The cost analysis in the Public Benefit and Cost Note section of this proposal also applies to small and micro businesses. TDI estimates that the proposed new sections may affect approximately 75 to 80 personal automobile insurers and 45 to 50 residential property insurers. The primary objective of this proposal is to establish the requirements for an appraisal provision in a personal auto or residential property insurance policy, consistent with Insurance Code Chapter 1813.
TDI has determined that the proposed new sections will not have an adverse economic effect or a disproportionate effect on rural communities because the rules do not apply to rural communities.
TDI considered the following alternatives to minimize any adverse impact on small and micro businesses while accomplishing the proposal's objectives:
(1) not proposing the new sections;
(2) excluding small and micro businesses from complying with the new sections; and
(3) extending the deadline for small and micro businesses to comply with the new sections.
Not proposing the new sections. As previously noted, the primary purpose of this rule is to implement Insurance Code Chapter 1813, which requires certain insurers that write personal automobile or residential property insurance to include an appraisal provision in an insurance policy beginning January 1, 2026. Insurance Code §1813.002 directs TDI to adopt rules necessary to implement the chapter, including rules that (1) establish the period in which an appraisal must be completed, considering the qualifications and selection of appraisers and umpires; and (2) mandate appraisal in certain circumstances. Not proposing the new sections would result in TDI failing to meet the clear directive in Insurance Code §1813.002. For this reason, TDI has rejected this option.
Excluding small and micro businesses from complying with the proposed new sections. Insurance Code §1813.001 identifies the insurers who are required to comply with Insurance Code Chapter 1813. Insurers who meet the definition of small and micro businesses under Government Code §2006.001 are not excluded under Insurance Code §1813.001(b). Excluding small and micro businesses from compliance would result in disparate treatment of policyholders who purchase a personal automobile or residential property insurance policy from a small or micro business. These policyholders would be deprived of the basic protections established by the rules, including the minimum appraisal provision requirements and the appraisal process notice requirements. For this reason, TDI has rejected this option.
Extending the deadline for small and micro businesses to comply with the proposed new sections. TDI decided to extend the deadline for compliance for all insurers because this option ensures consistent application of Insurance Code Chapter 1813, protects all policyholders who purchase a personal automobile or residential property policy, and lessens confusion by having only one compliance date for all applicable Texas insurers. In addition, the extended deadline for compliance will help alleviate some of the possible economic impacts of compliance, including economic impacts on small and micro businesses. Insurers will have the opportunity to incorporate the new requirements under Division 4 with other planned policy updates or changes during that period. For these reasons, TDI has decided to incorporate this option into the proposal.
EXAMINATION OF COSTS UNDER GOVERNMENT CODE §2001.0045. TDI has determined that this proposal does impose a possible cost on regulated persons. No additional rule amendments are required under Government Code §2001.0045 because the proposed rule is necessary to implement legislation. The proposed rule implements Insurance Code §1813.002, as added by SB 458.
GOVERNMENT GROWTH IMPACT STATEMENT. TDI has determined that for each year of the first five years that the proposed new sections are in effect, the proposed rule:
- will not create or eliminate a government program;
- will not require the creation of new employee positions or the elimination of existing employee positions;
- will not require an increase or decrease in future legislative appropriations to the agency;
- will not require an increase or decrease in fees paid to the agency;
- will create a new regulation;
- will not expand, limit, or repeal an existing regulation;
- will increase the number of individuals subject to the rule's applicability; and
- will positively affect the Texas economy by having appraisal provisions in policies because appraisal can be cheaper, more efficient, and a timelier dispute resolution option than litigation and by establishing reasonable and consistent minimum requirements that help ensure appraisals are fair and completed in a timely manner.
TAKINGS IMPACT ASSESSMENT. TDI has determined that no private real property interests are affected by this proposal, and that this proposal does not restrict or limit an owner's right to property that would otherwise exist in the absence of government action. As a result, this proposal does not constitute a taking or require a takings impact assessment under Government Code §2007.043.
REQUEST FOR PUBLIC COMMENT. TDI will consider any written comments on the proposal that are received by TDI no later than 5:00 p.m., central time, on June 8, 2026. Consistent with Government Code §2001.024(a)(8), TDI requests public comments on the proposal, including information related to the cost, benefit, or effect of the proposal and any applicable data, research, and analysis. Send your comments to ChiefClerk@tdi.texas.gov or to the Office of the Chief Clerk, MC: GC-CCO, Texas Department of Insurance, P.O. Box 12030, Austin, Texas 78711-2030.
The commissioner of insurance will also consider written and oral comments on the proposal in a public hearing under Docket No. 2862 at 10:00 a.m., central time, on June 2, 2026. TDI will hold the public hearing remotely using online resources and in person at the Barbara Jordan State Office Building, 1601 Congress Avenue, Austin Texas 78701 in Room 2.035. Details of how to view and participate virtually in the public hearing will be made available on TDI's website at www.tdi.texas.gov/alert/event/index.html.
STATUTORY AUTHORITY. TDI proposes new §§5.9800 - 5.9806 under Insurance Code §1813.002 and §36.001.
Insurance Code §1813.002 requires the commissioner to adopt rules necessary to implement Insurance Code Chapter 1813, including rules establishing the period in which an appraisal under Insurance Code Chapter 1813 must be completed and rules mandating an appraisal for total loss and damage of the property that is the subject of the appraisal.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
CROSS-REFERENCE TO STATUTE. Sections 5.9800 - 5.9806 implement Insurance Code Chapter 1813.
§
5.9800.
(a) This division implements Insurance Code Chapter 1813, concerning Appraisal of Disputed Losses, which requires personal automobile and residential property insurance policies to include an appraisal provision that is intended to provide a type of dispute resolution process solely to determine the amount of loss when that amount is in dispute between the policyholder and the insurer.
(b) This division applies to personal automobile and residential property insurance policies delivered, issued for delivery, or renewed on or after September 1, 2026, in Texas by insurers described in Insurance Code §1813.001(a), concerning Applicability of Chapter.
(c) This division does not apply to:
(1) Texas Windstorm Insurance Association policies; or
(2) commercial insurance policies.
§
5.9801.
The following words and terms have the following meanings when used in this division, unless the context clearly indicates otherwise.
(1) Appraisal--The process to resolve a dispute between the insurer and a policyholder about the amount of loss as described in Insurance Code Chapter 1813, concerning Appraisal of Disputed Losses.
(2) Appraisal provision--The policy provision that provides for appraisal, as required under Insurance Code Chapter 1813.
(3) Appraisal award--The written determination of the amount of loss which is signed during the appraisal process by:
(A) both appraisers; or
(B) by either of the appraisers and the umpire.
(4) Appraiser--An individual who is qualified to be an appraiser under this division and is hired by either party to participate in the appraisal process.
(5) Party--The insurer or policyholder.
(6) Personal automobile insurance--Automobile insurance coverage for the ownership, maintenance, or use of a private passenger, utility, or miscellaneous-type motor vehicle, including a motor home, trailer, or recreational vehicle, that is owned or leased by one or more individuals and not primarily used for the delivery of goods, materials, or services, other than for use in farm or ranch operations.
(7) Residential property insurance--Insurance coverage against loss to tangible personal property or to residential real property at a fixed location that is provided through a homeowners insurance policy, including a tenants insurance policy, a condominium owners insurance policy, or a residential fire and allied lines insurance policy.
(8) Umpire--An individual who is qualified to be an appraisal umpire under this division and is selected by the appraisers or otherwise appointed to participate in the appraisal process.
§
5.9802.
Every insurance policy subject to this division must have an appraisal provision that:
(1) states either party has the right to unilaterally demand appraisal;
(2) does not require the parties to reach an impasse before a party can demand appraisal;
(3) applies to disputes between the parties about the amount of loss, including partial or total loss;
(4) requires the appraisal award to be binding as to the amount of loss, unless:
(A) it was made without authority;
(B) it was not made in substantial compliance with the appraisal provision; or
(C) there was fraud, accident, or material mistake relevant to the appraisal;
(5) states the deadlines and process for appraisal, which must include the specific amounts of time listed in §5.9805 of this title (relating to Residential Property Appraisal Process)_or §5.9806 of this title (relating to Personal Automobile Appraisal Process) as applicable and be consistent with the other requirements in this division; and
(6) does not conflict with this division or other Texas law.
§
5.9803.
(a) At the same time the insurer provides notice of acceptance or rejection of the claim as required under Insurance Code §542.056, concerning Notice of Acceptance or Rejection of Claim, the insurer must also provide notice of the appraisal process to the policyholder that is consistent with this section. Notice of the appraisal process may be a separate document or may be included in the notice under Insurance Code §542.056.
(b) The appraisal process notice must be written in plain language and at least 10-point type, and explain:
(1) where the appraisal provision is in the policy contract;
(2) how the policyholder may demand appraisal, including where to send the demand and what information the demand should include;
(3) the policyholder's responsibilities in the appraisal process, including the duty to hire an appraiser and any responsibility for appraisal expenses;
(4) how the policyholder may request appointment of an umpire if the appraisers fail to jointly choose the umpire within the time provided under §5.9805(b)(2) of this title (relating to Residential Property Appraisal Process) or §5.9806(b)(2) of this title (relating to Personal Automobile Appraisal Process), including how to request judicial appointment of an umpire;
(5) the applicable time limits in the appraisal process including, at a minimum, the deadlines for:
(A) demanding appraisal;
(B) appointing appraisers;
(C) selection of an umpire; and
(D) issuing the appraisal award; and
(6) the effect of the appraisal award.
§
5.9804.
(a) Appraisers and umpires must be:
(1) competent by training or experience to evaluate the type of loss in dispute;
(2) independent from the parties; and
(3) disinterested in the outcome of the appraisal.
(b) In addition to subsection (a) of this section, appraisers and umpires in a residential property appraisal that involves loss to a dwelling must also be one of the following:
(1) an adjuster or public adjuster with experience or training in estimating residential property losses;
(2) an engineer or architect with experience or training in residential building construction or repair, investigating residential property damage, or estimating residential property losses; or
(3) an individual who otherwise has occupational experience or training in constructing or repairing the type of damaged property at issue or estimating the type of property loss at issue.
§
5.9805.
(a) Appraisal demand.
(1) Except as provided in paragraph (2) of this subsection, a demand for appraisal under a residential property insurance policy must be made in writing not later than one year from the date the insurer notifies the policyholder of acceptance or rejection of the claim as required under Insurance Code §542.056, concerning Notice of Acceptance or Rejection of Claim.
(2) If a lawsuit is filed concerning the loss at issue, the respondent must have 30 days from when the lawsuit is filed to make an appraisal demand.
(b) Appraisal and umpire procedures. Subject to subsection (c) of this section, the following deadlines apply after a written demand for appraisal is made under subsection (a) of this section.
(1) Within 20 days, each party must hire its own appraiser and provide the appraiser's name and contact information to the other party in writing.
(2) The appraisers must jointly choose an umpire. The appraisal provision must require the appraisers to jointly choose an umpire not later than 15 days after either:
(A) the requirements in paragraph (1) of this subsection are completed; or
(B) the appraisers cannot agree on the amount of loss in dispute within the time provided in paragraph (4) of this subsection.
(3) If the appraisers fail to jointly choose an umpire within the time provided under paragraph (2) of this subsection, an umpire must be appointed subject to the following provisions.
(A) The appraisal provision must allow either party to request judicial appointment of an umpire. The judicial appointment must be through a county or district court where the residential property is located.
(B) An appraisal provision may also include:
(i) an option for umpire appointment by an independent vendor that offers umpire selection services. An option for umpire appointment by an independent vendor must include at least two vendors and allow the policyholder to select which vendor is used, or it must allow only the policyholder to invoke the option for umpire appointment by a vendor; and
(ii) an option for umpire appointment through any alternative method that the parties mutually agree to in writing after appraisal has been demanded.
(C) A party requesting umpire appointment through judicial appointment or by an independent vendor must give written notice to the other party at least 10 days before making the request. For a judicial appointment, the written notice must include the location and identity of the court.
(D) On or before submitting a request for umpire appointment under this subsection, the party requesting the appointment must give the other party a copy of the request.
(4) Within 120 days after the appraisal demand was made, the two appraisers must attempt to agree on the amount of loss in dispute.
(5) If the appraisers cannot agree on the amount of loss in dispute, they must submit their differences to each other and the umpire. When an umpire is involved, the appraisal award must be issued not later than 240 days after the appraisal demand was made. If an appraisal award is not issued by the deadline, the umpire's engagement is terminated on that date, and the appraisers must choose a new umpire within 15 days after the deadline passes.
(c) Modifying deadlines. The parties may modify any deadline in the appraisal process by written agreement after the insurer provides the appraisal process notice required under §5.9803 of this title (relating to Appraisal Process Notice to Policyholders).
§
5.9806.
(a) Appraisal demand.
(1) Except as provided in paragraph (2) of this subsection, a demand for appraisal under a personal automobile insurance policy must be made in writing not later than 120 days from the date the insurer notifies the policyholder of acceptance or rejection of the claim as required under Insurance Code §542.056, concerning Notice of Acceptance or Rejection of Claim.
(2) If a lawsuit is filed concerning the loss at issue, the respondent must have 30 days from when the lawsuit is filed to make an appraisal demand.
(b) Appraisal and umpire procedures. Subject to subsection (c) of this section, the following deadlines apply after a written demand for appraisal is made under subsection (a) of this section.
(1) Within 20 days, each party must hire its own appraiser and provide the appraiser's name and contact information to the other party in writing.
(2) The appraisers must jointly choose an umpire. The appraisal provision must require the appraisers to jointly choose an umpire not later than 15 days after either:
(A) the requirements in paragraph (1) of this subsection are completed; or
(B) the appraisers cannot agree on the amount of loss in dispute within the time provided in paragraph (4) of this subsection.
(3) If the appraisers fail to jointly choose an umpire within the time provided under paragraph (2) of this subsection, an umpire must be appointed subject to the following provisions.
(A) The appraisal provision must allow either party to request judicial appointment of an umpire. The judicial appointment must be through a county or district court where the vehicle is principally garaged.
(B) An appraisal provision may also include:
(i) an option for umpire appointment by an independent vendor that offers umpire selection services. An option for umpire appointment by an independent vendor must include at least two vendors and allow the policyholder to select which vendor is used, or it must allow only the policyholder to invoke the option for umpire appointment by a vendor; and
(ii) an option for umpire appointment through any alternative method that the parties mutually agree to in writing after appraisal has been demanded.
(C) A party requesting umpire appointment through judicial appointment or by an independent vendor must give written notice to the other party at least 10 days before making the request. For judicial appointment, the written notice must include the location and identity of the court.
(D) On or before submitting a request for umpire appointment under this subsection, the party requesting the appointment must give the other party a copy of the request.
(4) Within 40 days after the appraisal demand was made, the two appraisers must attempt to agree on the amount of loss in dispute.
(5) If the appraisers cannot agree on the amount of loss in dispute, they must submit their differences to each other and the umpire. When an umpire is involved, the appraisal award must be issued not later than 180 days after the appraisal demand was made. If an appraisal award is not issued by the deadline, the umpire's engagement is terminated on that date, and the appraisers must choose a new umpire within 15 days after the deadline passes.
(c) Modifying deadlines. The parties may modify any deadline in the appraisal process by written agreement after the insurer provides the appraisal process notice required under §5.9803 of this title (relating to Appraisal Process Notice to Policyholders).
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 23, 2026.
TRD-202601783
Jessica Barta
General Counsel
Texas Department of Insurance
Earliest possible date of adoption: June 7, 2026
For further information, please call: (512) 676-6555
CHAPTER 11. HEALTH MAINTENANCE ORGANIZATIONS
The Texas Department of Insurance (TDI) proposes to repeal 28 TAC §11.505 and amend §§11.202, 11.301, 11.302, 11.501 - 11.504, 11.506, 11.701, 11.901, 11.902, 11.1402, 11.1604, and 11.2503, concerning health maintenance organizations (HMOs). The repeal and amendments update HMO filing rules to align with filing requirements in 28 TAC Chapter 3, Subchapter A, and implement House Bills 388, 2221, and 3211, 89th Legislature, 2025; and Senate Bills 493, 896, 926, and 1236, 89th Legislature, 2025.
EXPLANATION. Amendments to §§11.504, 11.506, 11.901, 11.902, 11.1402, and 11.2503 are necessary to implement the following legislation:
- HB 388 requires health plans to use a uniform coordination of benefits questionnaire that is adopted by TDI.
- HB 2221 repeals certain provisions in Insurance Code Chapter 541, concerning unlawful rebates and inducements, and replaces them with similar provisions in new Chapter 1702.
- HB 3211 establishes new contracting requirements for vision care plans.
- SB 493 prohibits certain pharmacy benefit manager contract provisions.
- SB 896 extends the period during which a newborn child is automatically covered and the deadline to enroll a newborn child into coverage.
- SB 926 expands provisions related to health plans that use steering or tiering to encourage enrollees to use certain network physicians and providers.
- SB 1236 expands requirements for pharmacy benefit network contracts.
In separate proposals also published in this issue of the Texas Register , TDI proposes to amend 28 TAC Chapters 3 and 26 to make changes to implement the previously referenced legislation. In a separate proposal published October 24, 2025 (50 TexReg 6976), TDI proposed a uniform coordination of benefits questionnaire in 28 TAC Chapter 3, Subchapter V, to implement HB 388. At a later date, TDI also plans to propose amendments to 28 TAC Chapter 21 to implement provisions in HB 2221 and SB 1236.
Additional amendments to §§11.202, 11.301, 11.302, 11.501 - 11.504, 11.701, and 11.1604, and the repeal of §11.505 are necessary to update HMO filing rules to align with filing requirements for life, health, and HMO products in 28 TAC Chapter 3, Subchapter A. Historically, HMO filing requirements were addressed exclusively in Chapter 11. However, in 2025, TDI modernized the rules in 28 TAC Chapter 3, Subchapter A, and expanded the scope to include all HMO filings that are filed with TDI's Life and Health Division through the NAIC's System for Electronic Rates and Forms Filing (SERFF) after an HMO receives a certificate of authority. The proposed amendments and repeal remove provisions that duplicate or conflict with the provisions in 28 TAC Chapter 3, Subchapter A. Because of the proposed reorganization of §11.301, cross-references in other sections of Chapter 11 are amended to conform to the reorganized subsections and paragraphs.
Descriptions of the sections as proposed follow, organized by subchapter.
Subchapter C.
Section 11.202.
An amendment is proposed to §11.202 to delete subsection (i), which requires each item in the application to be identified by a unique form number. This requirement is no longer necessary. Form numbers are needed only for filings made in SERFF, and applicable requirements are contained in 28 TAC Chapter 3, Subchapter A. The deletion of subsection (i) conforms to the proposed amendments to §11.301.
Subchapter D.
Section 11.301.
The proposed amendments to §11.301 modify the filing requirements to conform to changes adopted in 28 TAC Chapter 3, Subchapter A, which broadly address filing requirements for life, health, and HMO products and remove the need for most HMO-specific filing requirements. As part of these amendments, provisions throughout the section are reorganized into subsections, renumbered paragraphs, and redesignated subparagraphs.
To improve readability, amendments to newly designated subsection (a) add statutory citations that are currently included in paragraph (1) and remove language addressing filings for preapproval or for information only because those filing types are addressed in subsequent subsections. Cross-references to paragraphs (4) and (5) are revised to instead reference newly designated subsections (c) and (d) to reflect the section's proposed reorganization. A sentence related to paper and electronic filings is deleted since other references in the section delineating such filing methods are also removed.
Paragraph (1) and subparagraph (A) are redesignated as subsection (b) and the catchline is modified to remove the words "and format," consistent with other changes to the subsection. To improve readability, the references to statutory citations that require filings for approval are moved to subsection (a). References to statutes and rules specifying the information that must be contained for a filing to be considered complete are reorganized into new paragraphs (1) - (3). New paragraph (4) adds a reference to filing rules in 28 TAC Chapter 3, Subchapter A, regarding submission requirements for life, health, and HMO products. Subparagraphs (B) - (E), related to filing format and methods, are deleted. Because almost all filings are made electronically, the provisions for paper filings are not necessary. The references to filing methods are unnecessary because they are addressed in newly designated subsections (c) and (d).
Paragraphs (2) and (3), related to form numbers, certification and transmittal forms, supporting documentation, and filing fees, are deleted because similar provisions are contained in 28 TAC Chapter 3, Subchapter A. Since form numbers are not required for filings outside the scope of 28 TAC Chapter 3, Subchapter A, and as previously discussed, the proposal makes a conforming amendment to §11.202 to remove a reference to paragraph (2).
Paragraph (4) is redesignated as subsection (c). References to submissions through SERFF are replaced with a reference to 28 TAC Chapter 3, Subchapter A, which requires electronic submission through SERFF.
Paragraph (5) is redesignated as subsection (d). The catchline is expanded to include filings for review because some filings, such as the schedule of charges, are classified as rate filings subject to review under 28 TAC Chapter 3, Subchapter A. To avoid duplication with filing requirements in 28 TAC Chapter 3, Subchapter A, the requirement for accompanying documents is removed. References to SERFF submissions are replaced with a reference to 28 TAC Chapter 3, Subchapter A, which requires electronic submission through SERFF.
Paragraph (6) is redesignated as subsection (e).
Paragraph (7) is redesignated as subsection (f) and updated to align with 28 TAC Chapter 3, Subchapter A. The catchline is revised to reference "requests for corrections" instead of "pending." Internal cross-references are updated to conform with organizational changes throughout the section. Subparagraph (C), which addresses holding a filing in a pending status, is deleted, since a corresponding requirement is not found in Insurance Code Chapter 1271 or in the filing rules in 28 TAC Chapter 3, Subchapter A. Redesignated paragraph (3) is revised to add a reference to 28 TAC §3.23 and to indicate that if an HMO has not addressed TDI's request for corrections or additional information within 10 business days, TDI may consider the filing withdrawn from review. This aligns with 28 TAC §3.23(c)(3) and replaces the current provision, stating that after 15 calendar days, the HMO may withdraw the filing before the end of the review period.
Section 11.302.
An amendment is proposed to §11.302(b)(4) to revise a reference to §11.301 to conform to proposed amendments to that section.
Subchapter F.
Section 11.501.
The proposed amendments to §11.501 remove outdated filing fee provisions in subsection (b) and replace them with references to the filing requirements in 28 TAC Chapter 3, Subchapter A. Subsection (c), regarding matrix filing fees, is deleted.
Section 11.502.
The proposed amendments to §11.502 modify subsection (a) to revise the reference to §11.301 to conform to the proposed amendments reorganizing that section and add a reference to filing requirements in 28 TAC Chapter 3, Subchapter A.
Section 11.503.
The proposed amendments to §11.503 revise subsection (a) to add a reference to filing requirements contained in 28 TAC Chapter 3, Subchapter A. Subsection (c) is amended to remove a reference to §11.505, which is proposed for repeal. To avoid duplication with provisions in §3.23 and 28 TAC §11.301, subsections (d) - (f) are deleted.
Section 11.504.
The proposed amendments to §11.504 revise subsection (a)(1) to add a reference to filing requirements in 28 TAC Chapter 3, Subchapter A, and revise subsection (a)(3) to implement HB 2221 by adding a reference to new Insurance Code Chapter 1702.
Repeal of Section 11.505.
The proposed repeal of §11.505 avoids duplication with filing requirements in 28 TAC Chapter 3, Subchapter A.
Section 11.506.
The proposed amendments to §11.506(b)(8)(D)(iii) and (v) implement SB 896 by expanding required coverage for newborn children from 31 days to 60 days following birth and by extending the deadline to notify the HMO.
Subchapter H.
Section 11.701.
The proposed amendments to §11.701 add a reference in subsection (a) to the filing requirements in 28 TAC Chapter 3, Subchapter A. New subsection (c) is added to reference requirements for major medical rate filings in 28 TAC Chapter 3, Subchapter F, which implements Insurance Code Chapter 1698.
Subchapter J.
Section 11.901.
The proposed amendments to §11.901 implement legislation related to health plan contracting. An amendment to subsection (b)(12) implements HB 388 by adding a citation to new Insurance Code §1203.153, in connection to a requirement for a contracted physician or provider to retain records on a patient's other health plan coverage, including the coordination of benefits questionnaire. New subsection (h) is added to implement SB 1236 by requiring that a contract between an HMO and a pharmacy or pharmacist comply with pharmacy benefits contracting standards in Insurance Code Chapter 1369.
Section 11.902.
Subsection (a)(7) is redesignated as (a)(8), and new subsection (a)(7) is added to implement HB 3211 by prohibiting HMO conduct that violates §1451.1545 or §1451.157. New subsection (a)(9) is added to implement SB 493 by prohibiting conduct that violates Insurance Code §4151.155.
Subsection (b) is amended to implement SB 926 by adding a reference to Insurance Code §843.322. To avoid duplicating the statute, subparagraphs (A) - (D) of paragraph (3) are deleted.
Subchapter O.
Section 11.1402.
An amendment is proposed to §11.1402 to implement HB 3211 by adding new subsection (e) to require vision care plans specifically to comply with Insurance Code §1451.1545.
Subchapter Q.
Section 11.1604.
A proposed amendment to §11.1604 revises a reference in paragraph (2) to §11.301 to conform to proposed amendments to that section.
Subchapter Z.
Section 11.2503.
An amendment is proposed to §11.2503(d) to implement HB 2221 by adding a citation to Insurance Code Chapter 1702.
The sections as proposed also include nonsubstantive editorial and formatting changes to conform them to the agency's current style and to improve the rule's clarity. These changes appear throughout the amended sections and include correcting the style of statutory citations; adding headings to cited statutes and rules; updating cross-references to other rules; updating terminology; and making other grammatical, punctuational, and formatting changes to reflect TDI's current drafting style and plain language preferences.
FISCAL NOTE AND LOCAL EMPLOYMENT IMPACT STATEMENT. Rachel Bowden, director of the Regulatory Initiatives Office in the Life and Health Division, has determined that during each year of the first five years the sections as proposed are in effect, there will be no measurable fiscal impact on state and local governments as a result of enforcing or administering them other than that imposed by statute. Ms. Bowden made this determination because the sections as proposed do not add to or decrease state revenues or expenditures, and because local governments are not involved in enforcing or complying with them.
Ms. Bowden does not anticipate any measurable effect on local employment or the local economy as a result of this proposal.
PUBLIC BENEFIT AND COST NOTE.
For each year of the first five years the sections as proposed are in effect, Ms. Bowden expects that administering them will have the public benefit of ensuring that TDI's rules conform to House Bills 388, 2221, and 3211, and Senate Bills 493, 896, 926, and 1236. The sections as proposed will also have the public benefit of simplifying HMO filing rules in Chapter 11 by conforming them to unified life, health, and HMO filing rules in 28 TAC Chapter 3, Subchapter A.
Ms. Bowden expects that the sections as proposed will not increase the cost of compliance. The 28 TAC Chapter 3 filing requirements were adopted in April 2025 and are already being applied to HMOs. The sections as proposed conform the HMO rules in Chapter 11 with the 28 TAC Chapter 3 rules and will not increase compliance costs. Any cost for those required to comply with the sections as proposed are attributable to House Bills 388, 2221, and 3211, and Senate Bills 493, 896, 926, and 1236.
ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS.
TDI has determined that the sections as proposed will not have an adverse economic effect on small or micro businesses, or on rural communities. As a result, and in accordance with Government Code §2006.002(c), TDI is not required to prepare a regulatory flexibility analysis.
EXAMINATION OF COSTS UNDER GOVERNMENT CODE §2001.0045. As explained in the Public Benefits and Cost Note, TDI has determined that this proposal does not impose a cost on regulated persons. Therefore, no additional rule amendments are required under Government Code §2001.0045.
GOVERNMENT GROWTH IMPACT STATEMENT.
TDI has determined that for each year of the first five years that the sections as proposed are in effect, the proposed rule:
- will not create or eliminate a government program;
- will not require the creation of new employee positions or the elimination of existing employee positions;
- will not require an increase or decrease in future legislative appropriations to the agency;
- will not require an increase or decrease in fees paid to the agency;
- will not create a new regulation;
- will expand, limit, or repeal an existing regulation;
- will not increase or decrease the number of individuals subject to the rule's applicability; and
- will not positively or adversely affect the Texas economy.
TAKINGS IMPACT ASSESSMENT.
TDI has determined that no private real property interests are affected by this proposal and that this proposal does not restrict or limit an owner's right to property that would otherwise exist in the absence of government action. As a result, this proposal does not constitute a taking or require a takings impact assessment under Government Code §2007.043.
REQUEST FOR PUBLIC COMMENT.
TDI will consider any written comments on the proposal that are received by TDI no later than 5:00 p.m., central time, on June 8, 2026. Consistent with Government Code §2001.024(a)(8), TDI requests public comments on the proposal, including information related to the cost, benefit, or effect of the proposal and any applicable data, research, and analysis. Send your comments to ChiefClerk@tdi.texas.gov or to the Office of the Chief Clerk, MC: GC-CCO, Texas Department of Insurance, P.O. Box 12030, Austin, Texas 78711-2030.
The commissioner of insurance will also consider written and oral comments on the proposal in a public hearing under Docket No. 2864. This proposal will be part of a rule hearing docket that will begin at 10:00 a.m., central time, on June 1, 2026. TDI will hold the public hearing remotely using online resources and in person at the Barbara Jordan State Office Building, 1601 Congress Avenue, Austin Texas 78701 in Room 2.034. Visit www.tdi.texas.gov/alert/event/index.html for more info on the proposed rule, hearing, and comment submission.
SUBCHAPTER
C.
STATUTORY AUTHORITY.
TDI proposes amendments to §11.202 under Insurance Code §§843.080, 843.151 and 36.001.
Insurance Code §843.080 authorizes the commissioner to adopt reasonable rules that the commissioner considers necessary for the proper administration of Insurance Code Chapter 843 to require an HMO, after receiving its certificate of authority, to submit modifications or amendments for the commissioner's approval or information.
Insurance Code §843.151 authorizes the commissioner to adopt reasonable rules to implement various parts of the Insurance Code and to ensure adequate access to health care services.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
CROSS-REFERENCE TO STATUTE.
The amendments to §11.202 implement Insurance Code Chapter 843, Subchapter C.
§
11.202.
(a) A proposed HMO may submit an application for a certificate of authority in electronic format, by electronic file transmission or in a data storage format acceptable to the department, or by paper.
(b)
If an HMO submits an application in paper format, the applicant must submit three separate copies of the application in separate three-ring binders[
,
] so that pages may be easily replaced when necessary. Paper applications must include dividers with identifying subject tabs preceding each separate exhibit.
(c) Applications submitted in an electronic format must include separate file folders with names identifying each exhibit.
(d) Each application must contain a table of contents.
(e) All pages must be clearly legible and numbered.
(f) An HMO should not use identical items in more than one section of the application. Instead of using the same information in more than one place, an application must refer to the file or page on which the required form or list may be found.
(g) An original application becomes the charter file once the applicant submits all required revisions and the commissioner approves the application.
(h)
The application is subject to Government Code Chapter 552
,
[
(
]concerning Public Information[
)
].
[(i) Each item in the application must be identified by a unique number as more fully described in §11.301(2) of this title (relating to Filing Requirements).]
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 2026.
TRD-202601803
Jessica Barta
General Counsel
Texas Department of Insurance
Earliest possible date of adoption: June 7, 2026
For further information, please call: (512) 676-6555
SUBCHAPTER
D.
STATUTORY AUTHORITY.
TDI proposes amendments to §11.301 and §11.302 under Insurance Code §§843.080, 843.151 and 36.001.
Insurance Code §843.080 provides that the commissioner may adopt reasonable rules that the commissioner considers necessary for the proper administration of Insurance Code Chapter 843 to require an HMO, after receiving its certificate of authority, to submit modifications or amendments for the commissioner's approval or information.
Insurance Code §843.151 authorizes the commissioner to adopt reasonable rules to implement various parts of the Insurance Code and to ensure adequate access to health care services.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
CROSS-REFERENCE TO STATUTE.
The amendments to §11.301 and §11.302 implement Insurance Code Chapters 843 and 1271.
§
11.301.
(a)
Filings required. Consistent with Insurance Code §843.080, concerning Modification or Amendment of Application Information, and Insurance Code Chapter 1271, Subchapter C, concerning Commissioner Approval, after
[
After
] the commissioner issues an HMO's certificate of authority, the HMO is required to file with the commissioner[
, either for approval before effect or for information only,
] any items specified in §11.204 of this title (relating to Contents) that the HMO has deleted, amended, or revised as outlined in
subsections (c) and (d)
[
paragraphs (4) and (5)
] of this section and any items specified in §11.302 of this title (relating to Service Area Expansion or Reduction Applications). These requirements include filing changes made necessary by federal or state law or regulations. [
All requirements in this section apply to both electronic and paper filings unless stated otherwise.
]
(b)
[
(1)
] Completeness [
and format
] of filings. [
(A)
] The department will not accept a filing for review until the filing is complete. An application to modify an approved application for a certificate of authority [
that requires the commissioner's approval under Insurance Code §843.080 (concerning Modification or Amendment of Application Information) or Insurance Code Chapter 1271, Subchapter C, (concerning Commissioner Approval)
] is considered complete when all information [
required by this section; §11.302; and Chapter 11, Subchapter T, of this title (relating to Quality of Care)
] that is applicable and reasonably necessary for the department to make a final determination has been filed
, including information required by:
[
.
]
(1) this section;
(2) §11.302 of this title;
(3) Subchapter T of this chapter (relating to Quality of Care); and
(4) Chapter 3, Subchapter A, of this title (relating to Submission Requirements for Filings and Departmental Actions Related to Such Filings).
[(B) Unless otherwise required by this chapter or the Insurance Code, an HMO may submit a filing electronically through the NAIC's System for Electronic Rate and Form Filing or through any other method acceptable to the department.]
[(C) Unless otherwise required by this chapter or the Insurance Code, paper filings must:]
[(i) be submitted on 8-1/2- by 11-inch paper;]
[(ii) not be submitted in bound booklets;]
[(iii) be legible;]
[(iv) be in typewritten, computer generated, or printer's proof format; and]
[(v) except for maps, not contain any color highlighting unless accompanied by a clean copy without highlighting.]
[(D) As provided in this section, an HMO may submit some filings as provided in §7.201 of this title (relating to Forms Filings).]
[(E) As provided in this section, an HMO may submit some filings as provided in §11.203(a) of this title (relating to Revisions During Review Process).]
[(2) Identifying form numbers required. Each item required to be filed by paragraphs (4) and (5) of this section must be identified by a printed unique form number, adequate to distinguish it from other items. The identifying form numbers must be composed of a total of no more than 40 letters, numbers, symbols, or spaces.]
[(A) The identifying form number must appear in the lower left-hand corner of the page. In the case of a multiple-page document, the identifying form number must only appear on the lower left-hand corner of the first page, and page numbers should appear on subsequent pages.]
[(B) If an item is to be replaced or revised after issuance of a certificate of authority, a new identifying form number must be assigned.]
[(i) A change in address or phone number on a form will not require a new identifying form number.]
[(ii) A new edition date added to the original identifying form number is an acceptable way of revising the number so that it is identifiable from any previously approved item; for example, if "G-100" was the originally approved number, then the revision may be numbered "G-100 12/79."]
[(iii) Changing the case of the suffix is not considered to be a change in the number; for example, "ED" and "ed," or "REV" and "rev" are the same for form numbering purposes.]
[(3) Attachments for filings. Filings required by paragraphs (4)(A) and (B) and (5)(A) and (B) of this section must be accompanied by the following:]
[(A) an HMO certification and transmittal form for each new, revised, or replaced item;]
[(B) the supporting documentation considered necessary by the commissioner to review the filing and, for filings submitted on paper, a cover letter which includes the following:]
[(i) company name;]
[(ii) form numbers that are being submitted; and]
[(iii) a paragraph that describes the type of filing being submitted, along with any additional information that would aid in processing the filing, including the reasons for submitting the filing; and]
[(C) the applicable filing fee as determined by §7.1301 of this title (relating to Regulatory Fees), unless the filing is made electronically through the NAIC's System for Electronic Rate and Form Filing, in which case the fees should not be attached to the filing. For filings made electronically, the department will send an invoice for the fees, and the HMO must pay, as provided in §7.1302 of this title (relating to Billing System).]
(c)
[
(4)
] Filings requiring approval. After issuance of a certificate of authority, each HMO must file with the commissioner, using the method specified below, a written request to implement or modify the following operations or documents and receive the commissioner's approval before putting the modifications into effect:
(1) as provided in Chapter 3, Subchapter A, of this title:
[(A) electronically through the NAIC's System for Electronic Rate and Form Filing:]
(A)
[
(i)
] evidence of coverage filings, as described in §11.501 of this title (relating to Contents of the Evidence of Coverage);
(B)
[
(ii)
] a description and a map of the service area, with key and scale, which must identify the county or counties or portions of counties to be served;
(C)
[
(iii)
] the written description of health care plan terms and conditions made available to any current or prospective group contract holder and current or prospective enrollee of the HMO, including the member handbook for all plans other than Children's Health Insurance Program (CHIP) plans in compliance with the requirements of Insurance Code §843.201
,
[
(
]concerning Disclosure of Information About Health Care Plan Terms
,
[
)
] and §11.1600 of this title (relating to Information to Prospective and Current Contract Holders and Enrollees); and
(D)
[
(iv)
] any material change in the HMO's emergency care procedures;
[(B) on paper or electronically through the NAIC's System for Electronic Rate and Form Filing or any other method acceptable to the department:]
(E)
[
(i)
] any material change in network configuration; and
(F)
[
(ii)
] if a material change in the network configuration results in the HMO's inability to comply with the network adequacy standards described in §11.1607 of this title (relating to Accessibility and Availability Requirements), an access plan that complies with that section;
(2)
[
(C)
] as provided in §7.201 of this title
(relating to Forms Filings)
:
(A)
[
(i)
] the form of all contracts described in §11.204(14)(A), (C), (D), and (E) of this title, including any amendments to those contracts and prior notification of the cancellation of any management contracts in §11.204(14)(E) of this title;
(B)
[
(ii)
] the form of all contracts or subcontracts between affiliated physician and provider groups with the individual members of the groups providing health care services to the HMO's enrollees described in §11.204(14)(B) of this title, including any amendments to those contracts;
(C)
[
(iii)
] any new or revised loan agreements or amendments documenting loans made by the HMO to any affiliated person or to any medical or other health care physician or provider, whether providing services currently, previously, or potentially in the future
,
[
;
] and any guarantees of any affiliated person's, physician's, or provider's obligations to any third party;
(D)
[
(iv)
] any agreement by which an affiliate agrees to handle an HMO's investments under §11.806 of this title (relating to Investment Management by Affiliate Corporation);
(E)
[
(v)
] any change in the physical address of the books and records described in §11.205 of this title (relating to Additional Documents to be Available for Review);
(F)
[
(vi)
] any change to any of the requirements for guarantees under §11.810 of this title (relating to Guarantee from a Sponsoring Organization);
(G)
[
(vii)
] any insurance contracts or amendments, guarantees, or other protection against insolvency, including the stop-loss or reinsurance agreements, if changing the carrier or description of coverage, between the HMO and affiliates, as described in §11.204(16) of this title; and
(H)
[
(viii)
] modifications to any type of affiliate compensation arrangements, such as compensation based on fee-for-service arrangements, risk-sharing arrangements, or capitated risk arrangements, made to physicians and providers in exchange for the provision of, or the arrangement to provide health care services to, enrollees, including any financial incentives for physicians and providers;
(3)
[
(D)
] as provided in §11.203(a) of this title, a copy of any proposed amendment to basic organizational documents, bylaws, rules, or any similar document regulating the conduct of the internal affairs of the applicant and, if the approved amendment must be filed with the secretary of state, a certified copy of the amendment with the file mark of the secretary of state; and
(4)
[
(E)
] as provided in Chapter 11, Subchapter B, of this title (relating to Name Application Procedure), any name or assumed name on a form, as specified in §11.105 of this title (relating to Use of the Term "HMO," Service Marks, Trademarks, Assumed Name).
(d)
[
(5)
] Filings for
review or
information. Material filed under this
subsection
[
paragraph
] is not to be considered approved[
,
] but may be subject to review for compliance with Texas law and consistency with other HMO documents. [
Each item filed under this paragraph must be accompanied by a completed HMO certification and transmittal form in addition to those attachments required under paragraph (3) of this section.
] Within 30 days of the effective date, an HMO must file with the commissioner, for
review or
information, deletions and modifications to the following previously approved or filed operations and documents:
(1) as provided in Chapter 3, Subchapter A, of this title:
[(A) electronically through the NAIC's System for Electronic Rate and Form Filing:]
(A)
[
(i)
] the formula or method for calculating the schedule of charges as specified in Chapter 11, Subchapter H, of this title (relating to Schedule of Charges);
(B)
[
(ii)
] any modification of drug coverage under Insurance Code §1369.0541
,
[
(
]concerning Modification of Drug Coverage Under Plan[
)
]; and
(C)
[
(iii)
] the member handbook for CHIP plans, together with a certification from the HMO that the handbook has been approved by the Texas Health and Human Services Commission and a copy of the document approving the handbook;
[(B) on paper or electronically through the NAIC's System for Electronic Rate and Form Filing or any other method acceptable to the department:]
(D)
[
(i)
] a copy of the form of any new contract or subcontract or any substantive change to previously filed copies of forms of all contracts between the HMO and any physician or provider described in §11.204(14)(B) of this title, and copies of forms of all contracts between the HMO and an insurer or group hospital service corporation to offer indemnity benefits, whether used with all contracts or on an individual basis. All copies of amended contracts must be marked to indicate revisions. In addition, the HMO must answer all questions listed on the HMO certification and transmittal form;
(E)
[
(ii)
] a copy of the executed agreement between the HMO and any delegated entities and delegated networks as defined in §11.2602 of this title (relating to Definitions); and
(F)
[
(iii)
] any change in the quality assurance program, including the peer review program, as required by Insurance Code §843.082(1)
,
[
(
]concerning Requirements for Approval of Application
,
[
)
] or §843.102
,
[
(
]concerning Health Maintenance Organization Quality Assurance[
)
], with descriptions of arrangements for sharing pertinent medical records between physicians and providers contracting or subcontracting under §11.204(14)(B) of this title with the HMO and ensuring the records' confidentiality;
(2)
[
(C)
] as provided in §7.201 of this title, a copy of any notice of cancellation of fidelity bonds, new fidelity bonds, or amendments to fidelity bonds, for officers and employees, including notarized certification by the corporate secretary or corporate president that the material is true, accurate, and complete, as described in §11.204(7) and (14)(D) of this title;
(3)
[
(D)
] as provided in §11.203(a) of this title:
(A)
[
(i)
] a list of officers and directors and a biographical data sheet for each person listed on the officers and directors page under Insurance Code §843.078(b)
,
[
(
]concerning Contents of Application
,
[
)
] and biographical data forms in §11.204(5)(A), (B), and (C) of this title; and
(B)
[
(ii)
] any change of the certificate of authority for a domestic or foreign HMO[
,
] and, if a foreign HMO, a certified copy of the certificate of authority and power of attorney.
(e)
[
(6)
] Approval period. Any modification for which the commissioner's approval is required may be considered approved, unless it is disapproved within 30 days from the date the filing is determined by the department to be complete. The commissioner may postpone the action for a period not to exceed 30 days, as necessary for proper consideration. The department will notify the HMO in writing if it postpones a decision on a modification.
(f)
[
(7)
] Approval, disapproval, and
requests for corrections
[
pending
].
(1)
[
(A)
] Filings requiring approval under
subsection (c)(1)(A) - (C)
[
paragraph (4)(A)(i)- (iii)
] of this section will be approved or disapproved in writing within the period set forth in
subsection (e)
[
paragraph (6)
] of this section unless, before the department's issuance of notice of proposed negative action under §1.704(a) of this title (relating to Summary Procedure; Notice), the HMO has been contacted by the department regarding corrections or additional information necessary for commissioner's approval, and files a written consent to waive the approval period with the department.
(2)
[
(B)
] The department may waive the approval period on its receipt of the HMO's written consent.
[(C) The department may hold the filing in a pending status for a reasonable period, but not more than 15 calendar days after the date of the department's request.]
(3)
[
(D)
]
Consistent with §3.23 of this title (relating to Acceptance, Rejection, and Disposition of Filings), if
[
If
] the HMO has not addressed the department's request for corrections or additional information within
10 business days, then the department may consider the filing withdrawn from review
[
15 calendar days, then the HMO may withdraw the filing before the end of the applicable review period, which is either the 30th day after filing or the 60th day after filing for an extended review period
].
§
11.302.
(a)
An HMO must file an application with the department for approval before the HMO may expand
or reduce
an existing service area[
, reduce an existing service area,
] or add a new service area.
(b)
For the purposes of an application to expand
or reduce
an existing service area[
, reduce an existing service area,
] or add a new service area, an HMO must file the following items:
(1) a description and a map with key and scale, showing both the currently approved service area and the proposed new service area , as required by §11.204(13) of this title (relating to Contents);
(2) network configuration information, as required by §11.204(19) of this title;
(3) combined financial projections , as described in §11.204(10)(B) of this title, including a breakdown of the income statement for existing business, and the effect of the proposed service area expansion or reduction; and
(4)
if any of the items specified in §11.301 of this title (relating to Filing Requirements) are changed by a service area expansion or reduction application, the new item or any amendments to an existing item must be filed
as specified in §11.301
[
for approval or filed for information, as outlined in §11.301(4) and (5)
] of this title.
(c)
The department will not accept an application for review until the application is complete. An application to modify the certificate of authority that requires the commissioner's approval under Insurance Code §843.080
,
[
(
]concerning Modification or Amendment of Application Information
,
[
)
] or Chapter 1271
,
Subchapter C, [
(
]concerning Commissioner Approval
,
[
)
] is considered complete when all information required by §11.301 of this title; this section; and Chapter 11, Subchapter T, of this title (relating to Quality of Care) that is reasonably necessary for a final determination by the department has been filed with the department.
(d) Before consideration of a service area expansion or reduction application, an HMO must comply with the requirements of Chapter 11, Subchapter T, of this title, in the existing service areas and in the proposed service areas.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 2026.
TRD-202601804
Jessica Barta
General Counsel
Texas Department of Insurance
Earliest possible date of adoption: June 7, 2026
For further information, please call: (512) 676-6555
SUBCHAPTER
F.
STATUTORY AUTHORITY.
TDI proposes amendments to §§11.501 - 11.504 and 11.506 under Insurance Code §§843.151, 1271.004, 1501.010, 1702.006, and 36.001.
Insurance Code §843.151 authorizes the commissioner to adopt reasonable rules to implement various parts of the Insurance Code related to HMOs and ensure that enrollees have adequate access to health care services.
Insurance Code §1271.004 authorizes the commissioner to adopt rules necessary to implement the section and meet the minimum requirements of federal law, including regulations.
Insurance Code §1501.010 directs the commissioner to adopt rules necessary to implement Insurance Code Chapter 1501 and meet the minimum requirements of federal law, including regulations.
Insurance Code §1702.006 authorizes the commissioner to adopt reasonable rules necessary to implement Insurance Code Chapter 1702.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
CROSS-REFERENCE TO STATUTE.
The amendments to §§11.501 - 11.504 and 11.506 implement Insurance Code Chapters 843 and 1271. The amendments to §11.504 implement Insurance Code Chapter 1702. The amendments to §11.506 implement Insurance Code §§1271.103, 1501.157 and 1501.607.
§
11.501.
(a) An evidence of coverage or an amendment to an evidence of coverage may not be issued, delivered, or used in Texas unless it has been filed for review and has received the approval of the commissioner. The following forms are always considered to be part of the evidence of coverage:
(1) group agreement;
(2) certificate issued to each subscriber who is enrolled through a group (the same form may be used as both the group agreement and the group certificate);
(3) conversion and individual agreements;
(4) group, conversion, and individual applications for coverage;
(5) group subscriber enrollment form;
(6) riders, endorsements, amendments, and letters of agreement;
(7) matrix filings;
(8) schedule of benefits; and
(9) any other form attached to or made a part of the evidence of coverage.
(b)
Each of the forms described in subsection (a) of this section must be identified with a unique form number and individually approved by the commissioner before being issued, delivered, or used in Texas
, consistent with the filing requirements under Chapter 3, Subchapter A, of this title (relating to Submission Requirements for Filings and Departmental Actions Related to Such Filings)
. [
Each form described in subsection (a) of this section will be considered a separate evidence of coverage filing and, except as provided in subsection (c) of this section, is subject to the filing fee prescribed in §7.1301(g)(4) of this title (relating to Regulatory Fees) for initial submissions.
]
[(c) The filing fee for matrix filings is $100 per individual evidence of coverage provision, with a maximum fee of $500, whether the filing is an initial submission or a resubmission.]
§
11.502.
(a)
The filing and formatting requirements of §11.301[
(1)(B) and (2)(A)
] of this title (relating to Filing Requirements)
and Chapter 3, Subchapter A, (relating to Submission Requirements for Filings and Departmental Actions Related to Such Filings)
apply to an evidence of coverage[
,
] when filed as part of the application for a certificate of authority.
(b) During the review period, an applicant must submit each new page or form reflecting any revisions.
(c) No later than the 10th calendar day after approval or issuance of a certificate of authority, an HMO must file a clean, final version of the evidence of coverage with revisions and a copy of the original version of the evidence of coverage showing the new or revised text as redlined. The submission must include:
(1) an explanation that the evidence of coverage was submitted as part of the application for a certificate of authority and is being submitted in compliance with subsection (c) of this section;
(2) a certification that the forms are without deviation and are the exact final evidence of coverage versions that resulted in approval of the certificate of authority application; and
(3) the final version of an approved service area description and map as attached to the evidence of coverage, with key and scale, which must identify the county or counties or portions of counties to be served.
(d) Any discrepancy in content between the final document to be issued and the approved version is grounds for revocation of a certificate of authority.
§
11.503.
(a)
After receipt of a certificate of authority, no evidence of coverage filing may be amended or altered in any manner, and no new evidence of coverage filing may be used, unless the proposed new or revised evidence of coverage filing has been filed for review and has received the
commissioner's
approval [
of the commissioner
]. The evidence of coverage must be filed as provided in
Chapter 3, Subchapter A, of this title (relating to Submission Requirements for Filings and Departmental Actions Related to Such Filings) and
§11.301 of this title (relating to Filing Requirements).
(b) The department will notify the HMO of the department's action in compliance with §1.704 of this title (relating to Summary Procedure; Notice).
(c)
The department will base its approval or disapproval on the content of drafts submitted to the department. [
Filings must comply with the specifications described in §11.505 of this title (relating to Specifications for the Evidence of Coverage and Matrix Filings).
] Any discrepancy in content between the final document to be issued and the approved draft is grounds for revocation of the certificate of authority.
[(d) The review period for an evidence of coverage filing begins on the date an acceptable, typed draft of the form is received.]
[(e) The review period may be extended on 30-days written notice of extension to the HMO before the expiration of the initial review period.]
[(f) At the end of the review period, the evidence of coverage filing is considered approved unless it has already been withdrawn, affirmatively approved, or disapproved by the commissioner.]
§
11.504.
(a) If the department disapproves any portion of an evidence of coverage, the department will specify the reason for the disapproval. The department may disapprove any form or withdraw any previous approval if a form:
(1)
fails to meet the requirements of Insurance Code Chapter 1271
,
[
(
]concerning Benefits Provided by Health Maintenance Evidence of Coverage; Charges
;
[
),
] this chapter
; Chapter 3, Subchapter A, of this title (relating to Submission Requirements for Filings and Departmental Actions Related to Such Filings);
[
,
] or other applicable statutes and regulations;
(2) does not properly describe the services and benefits;
(3)
contains any statements that are unclear, untrue, unjust, unfair, inequitable, misleading, or deceptive or that violate Insurance Code Chapters 541
,
[
(
]concerning Unfair Methods of Competition and Unfair or Deceptive Acts or Practices
;
[
),
] 542
,
[
(
]concerning Processing and Settlement of Claims
;
[
),
] 543
,
[
(
]concerning Prohibited Practices Related to Policy or Certificate of Membership
;
[
),
] 544
,
[
(
]concerning Prohibited Discrimination
;
[
), or
] 547
,
[
(
]concerning False Advertising by Unauthorized Insurers
;
[
),
]
or Insurance Code Chapter 1702, concerning Regulation Of Certain Trade Practices,
or any other applicable
laws
[
law
] or regulations;
(4)
provides services or benefits that are too restrictive to achieve the
form's
purpose [
for which the form was designed
];
(5) fails to attain a reasonable degree of readability, simplicity, and conciseness;
(6) provides services or benefits or contains other provisions that would endanger the solvency of the issuing HMO; or
(7)
is contrary to the
laws or policies
[
law or policy
] of this state.
(b)
If the department disapproves a form, the HMO may file a written request for a hearing on the matter under Insurance Code §1271.102
,
[
(
]concerning Procedures for Approval of Form of Evidence of Coverage or Group Contract; Withdrawal of Approval[
)
].
§
11.506.
(a) Each enrollee residing in Texas is entitled to an evidence of coverage under a health care plan. An HMO may deliver the evidence of coverage electronically but must provide a paper copy on request.
(b) Each group, individual, and conversion contract and group certificate must contain the following provisions:
(1)
Face page. Where applicable, the
HMO's
name, address, website address, and phone number [
of the HMO
] must appear. The toll-free number referred to in Insurance Code §521.102, concerning Health Maintenance Organization or Insurer Toll-Free Number for Information and Complaints, must appear on the face page.
(A) The face page of an agreement is the first page that contains any written material.
(B) If the agreements or certificates are in booklet form, the first page inside the cover is considered the face page.
(C) The HMO must provide the information regarding the toll-free number referred to in Insurance Code Chapter 521, Subchapter C, concerning Health Maintenance Organization or Insurer Toll-Free Number for Information and Complaints, in compliance with §1.601 of this title (relating to Notice of Toll-Free Telephone Numbers and Information and Complaint Procedures).
(2)
Benefits. A schedule of all health care services that are available to enrollees under the basic, limited, or single service plan must be included, together with any copayments or deductibles and a description of where and how to obtain services. An HMO may use a variable copayment or deductible schedule. The schedule must clearly indicate the benefit
it applies
to [
which it applies
].
(A) Copayments. An HMO may require copayments to supplement payment for health care services.
(i) Each basic health care service HMO may establish one or more reasonable copayment options. A reasonable copayment option may not exceed 50% of the total cost of services provided.
(ii)
A basic health care service HMO may not impose copayment charges on any enrollee in any calendar year[
,
] when the copayments made by the enrollee in that calendar year total 200% of the total annual premium cost
that
[
which
] is required to be paid by or on behalf of that enrollee. This limitation applies only if the enrollee demonstrates that copayments in that amount have been paid in that year.
(iii)
The HMO must state the copayment
;
[
,
] the limit on enrollee copayments
;
[
,
] and the enrollee reporting responsibility in the group, individual, or conversion agreement and group certificate.
(B) Deductibles. A deductible must be for a specific dollar amount of the cost of the basic, limited, or single health care service. Except for a consumer choice benefit plan authorized by Insurance Code Chapter 1507, concerning Consumer Choice of Benefits Plans, an HMO may not charge a deductible for services received in the HMO's delivery network. Except in cases involving emergency care and services that are not available in the HMO's delivery network, as described in §11.1611 of this title (relating to Out-of-Network Claims; Non-Network Physicians and Providers), an HMO may charge an out-of-network deductible for services performed out of the HMO's service area or for services performed by a physician or provider who is not in the HMO's delivery network.
(C) Facility-based physicians or other health care practitioners. In compliance with Insurance Code §1456.003, concerning Required Disclosure: Health Benefit Plan, a statement must be included that is consistent with §21.4903 of this title (relating to Out-of-Network Notice and Disclosure Requirements) and that provides notice that:
(i) a facility-based physician or other health care practitioner may not be included in the health benefit plan's provider network;
(ii) unless the enrollee elects to receive out-of-network care and signs a waiver of balance billing protections, a non-network facility-based physician or other health care practitioner may not balance bill the enrollee for amounts not paid by the health benefit plan for covered services or supplies provided in a network facility; and
(iii) if the enrollee receives a balance bill, the enrollee should contact the HMO.
(D) Immunizations. An HMO may not charge a copayment or deductible for immunizations as described in Insurance Code Chapter 1367, Subchapter B, concerning Childhood Immunizations, for a child from birth through the date the child is 6 years of age, except that a small employer health benefit plan as defined by Insurance Code §1501.002, concerning Definitions, that covers the immunizations may charge a copayment, and a consumer choice benefit plan under Insurance Code Chapter 1507 may charge a copayment and a deductible.
(3) Cancellation and nonrenewal. A statement must be included that specifies the following grounds for cancellation and nonrenewal of coverage and the minimum notice period that will apply.
(A)
Unless otherwise prohibited by law, an HMO may cancel coverage of a subscriber in a group and the subscriber's enrolled dependents under circumstances described in this subparagraph,
as
[
so
] long as the circumstances do not include health status-related factors:
(i) for nonpayment of amounts due under the contract, after not less than 30-days' written notice, except no additional written notice will be required for failure to pay premium;
(ii) after not less than 15-days' written notice, in the case of fraud or intentional misrepresentation of a material fact, except as described in paragraph (13) of this subsection;
(iii) after not less than 15-days' written notice, in the case of fraud in the use of services or facilities;
(iv) immediately, subject to continuation of coverage and conversion privilege provisions, if applicable, for failure to meet eligibility requirements other than the requirement that the subscriber reside, live, or work in the service area; and
(v)
after not less than 30-days' written notice, where the subscriber does not reside, live, or work in the
HMO's
service area [
of the HMO
] or area [
for which
] the HMO is authorized to do business
in
, but only if the HMO terminates coverage uniformly without regard to any health status-related factor of enrollees, except that an HMO may not cancel coverage for a child who is the subject of a medical support order because the child does not reside, live, or work in the service area.
(B) An HMO may cancel a group under circumstances described below, unless otherwise prohibited by law:
(i) for nonpayment of premium, at the end of the grace period as described in paragraph (12) of this subsection;
(ii) in the case of fraud on the part of the group, after 15-days' written notice;
(iii) for employer groups, for violation of participation or contribution rules, under §26.8 of this title (relating to Guaranteed Issue; Contribution and Participation Requirements) and §26.303 of this title (relating to Coverage Requirements);
(iv) for employer groups, under §26.16 of this title (relating to Refusal to Renew and Application to Reenter Small Employer Market) and §26.309 of this title (relating to Refusal to Renew and Application to Reenter Large Employer Market) on discontinuance of:
(I) each of its small or large employer coverages; or
(II) a particular type of small or large employer coverage;
(v)
where no enrollee resides, lives, or works in the
HMO's
service area [
of the HMO
] or area [
for which
] the HMO is authorized to do business
in
, but only if the coverage is terminated uniformly without regard to any health status-related factor of enrollees after 30-days' written notice; and
(vi)
if
an employer's
membership [
of an employer
] in an association ceases, and if coverage is terminated uniformly without regard to the health status of an enrollee, after 30-days' written notice.
(C) A group or individual contract holder may cancel a contract in the case of a material change by the HMO to any provisions required to be disclosed to contract holders or enrollees under this chapter or other law after not less than 30-days' written notice to the HMO.
(D)
Unless otherwise prohibited by law, an
[
An
] HMO may cancel an individual contract [
under circumstances described below, unless otherwise prohibited by law
]:
(i) for nonpayment of premiums under the terms of the contract, including any timeliness provisions, without written notice, subject to paragraph (12) of this subsection;
(ii) in the case of fraud or intentional material misrepresentation, except as described in paragraph (13) of this subsection, after not less than 15-days' written notice;
(iii) in the case of fraud in the use of services or facilities, after not less than 15-days' written notice;
(iv)
after not less than 30-days' written notice where the subscriber does not reside, live, or work in the
HMO's
service area [
of the HMO
] or area [
in which
] the HMO is authorized to do business
in
, but only if coverage is terminated uniformly without regard to any health status-related factor of enrollees, except that an HMO may not cancel coverage for a child who is the subject of a medical support order because the child does not reside, live, or work in the service area;
(v) in case of termination by discontinuance of a particular type of individual coverage by the HMO in that service area, but only if coverage is discontinued uniformly without regard to health status-related factors of enrollees and dependents of enrollees who may become eligible for coverage, after 90-days' written notice, in which case the HMO must offer to each enrollee on a guaranteed-issue basis any other individual basic health care coverage offered by the HMO in that service area; and
(vi) in case of termination by discontinuance of all individual basic health care coverage by the HMO in that service area, but only if coverage is discontinued uniformly without regard to health status-related factors of enrollees and dependents of enrollees who may become eligible for coverage, after 180-days' written notice to the commissioner and the enrollees, in which case the HMO may not re-enter the individual market in that service area for five years beginning on the date of discontinuance of the last coverage not renewed.
(4) Claim payment procedure. A provision that sets forth the procedure for paying claims, including any time frame for payment of claims that must comply with Insurance Code Chapter 542, Subchapter B, concerning Prompt Payment of Claims; Insurance Code §1271.005, concerning Applicability of Other Law; and rules adopted under these Insurance Code provisions.
(5) Complaint and appeal procedures. A description of the HMO's complaint and appeal process available to complainants, including internal adverse determination appeal and independent review procedures under Insurance Code Chapter 4201, concerning Utilization Review Agents, and Chapter 19, Subchapter R, of this title (relating to Utilization Reviews for Health Care Provided Under a Health Benefit Plan or Health Insurance Policy).
(6) Definitions. A provision defining any words in the evidence of coverage that have other than the usual meaning. Definitions must be in alphabetical order.
(7) Effective date. A statement of the effective date requirements of various kinds of enrollees.
(8) Eligibility. A statement of the eligibility requirements for membership.
(A) The statement must provide that the subscriber must reside, live, or work in the service area and the legal residence of any enrolled dependents must be the same as the subscriber, or the subscriber must reside, live, or work in the service area and the residence of any enrolled dependents must be:
(i) in the service area with the person having temporary or permanent conservatorship or guardianship of the dependents, including adoptees or children who have become the subject of a suit for adoption by the enrollee, where the subscriber has legal responsibility for the health care of the dependents;
(ii) in the service area under other circumstances where the subscriber is legally responsible for the health care of the dependents;
(iii) in the service area with the subscriber's spouse; or
(iv) anywhere in the United States for a child whose coverage under a plan is required by a medical support order.
(B) The statement must provide the conditions under which dependent enrollees may be added to those originally covered.
(C) The statement must describe any limiting age for subscriber and dependents.
(D) The statement must provide a clear statement regarding the coverage of newborn children.
(i) No evidence of coverage may contain any provision excluding or limiting coverage for a newborn child of the subscriber or the subscriber's spouse.
(ii)
Congenital defects must be treated the same as any other illness or injury [
for which
] coverage is provided
for
.
(iii)
The HMO may require that the subscriber notify the HMO
not later than the 60th day
[
during the initial 31 days
] after the birth of the child and pay any premium required to continue coverage for the newborn child.
(iv) The HMO may not require that a newborn child receive health care services only from network physicians or providers after the birth if the newborn child is born outside the HMO service area due to an emergency or born in a non-network facility to a mother who does not have HMO coverage, but it may require that the newborn be transferred to a network facility at the HMO's expense and, if applicable, to a network provider when the transfer is medically appropriate as determined by the newborn's treating physician.
(v)
A newborn child of the subscriber or subscriber's spouse is entitled to coverage during the initial
60
[
31
] days following birth. The HMO must allow an enrollee
60
[
31
] days after the birth of the child to notify the HMO, either verbally or in writing, of the addition of the newborn as a covered dependent.
(E) The statement must include a clear statement regarding the coverage of the enrollee's grandchildren that complies with Insurance Code §1201.062, concerning Coverage for Certain Children in Individual or Group Policy or in Plan or Program, and §1271.006, concerning Benefits to Dependent Child and Grandchild.
(9) Emergency services. A description of how to obtain services in emergency situations, including:
(A) what to do in case of an emergency occurring outside or inside the service area;
(B) a statement of any restrictions or limitations on out-of-area services;
(C) a statement that the HMO will provide for any medical screening examination or other evaluation required by state or federal law that is necessary to determine whether an emergency medical condition exists in a hospital emergency facility or comparable facility;
(D) a statement that necessary emergency care services will be provided, including the treatment and stabilization of an emergency medical condition;
(E) a statement that where stabilization of an emergency condition originated in a hospital emergency facility or in a comparable facility, as defined in subparagraph (F) of this paragraph, treatment subject to stabilization must be provided to enrollees as approved by the HMO, provided that:
(i) the HMO must approve or deny coverage of poststabilization care as requested by a treating physician or provider; and
(ii) the HMO must approve or deny the treatment within the time appropriate to the circumstances relating to the delivery of the services and the condition of the patient, but in no case may approval or denial exceed one hour from the time of the request; and
(F) for purposes of this paragraph, "comparable facility" includes the following:
(i)
any stationary or mobile facility, including[
, but not limited to,
] Level V Trauma Facilities and Rural Health Clinics that have licensed or certified or both licensed and certified personnel and equipment to provide Advanced Cardiac Life Support consistent with American Heart Association and American Trauma Society standards of care and a free-standing emergency medical care facility as that term is defined in Insurance Code §843.002, concerning Definitions;
(ii) for purposes of emergency care related to mental illness, a mental health facility that can provide 24-hour residential and psychiatric services and that is:
(I) a facility operated by the Texas Department of State Health Services;
(II) a private mental hospital licensed by the Texas Department of State Health Services;
(III) a community center as defined by Texas Health and Safety Code §534.001, concerning Establishment;
(IV) a facility operated by a community center or other entity the Texas Department of State Health Services designates to provide mental health services;
(V) an identifiable part of a general hospital in which diagnosis, treatment, and care for persons with mental illness is provided and that is licensed by the Texas Department of State Health Services; or
(VI) a hospital operated by a federal agency.
(10) Entire contract, amendments. A provision stating that the form, applications, if any, and any attachments constitute the entire contract between the parties and that, to be valid, any change in the form must be approved by an officer of the HMO and attached to the affected form and that no agent has the authority to change the form or waive any of the provisions.
(11) Exclusions and limitations. A provision setting forth any exclusions and limitations on basic, limited, or single health care services.
(12) Grace period. A provision for a grace period of at least 30 days for the payment of any premium due after the first premium payment during which the coverage remains in effect. An HMO may add a charge to the premium for late payments received within the grace period.
(A) If payment is not received within the 30 days, coverage may be canceled after the 30th day and the terminated members may be held liable for the cost of services received during the grace period, if this requirement is disclosed in the agreement.
(B) Despite subparagraph (A) of this paragraph, provisions regarding the liability of group contract holder for an enrollee's premiums must comply with Insurance Code §843.210, concerning Terms of Enrollee Eligibility, and §21.4003 of this title (relating to Group Policyholder, Group Contract Holder, and Carrier Premium Payment and Coverage Obligations).
(13) Incontestability:
(A) All statements made by the subscriber on the enrollment application are considered representations and not warranties. The statements are considered truthful and made to the best of the subscriber's knowledge and belief. A statement may not be used in a contest to void, cancel, terminate, or nonrenew an enrollee's coverage or reduce benefits unless:
(i) it is in a written enrollment application signed by the subscriber; and
(ii) a signed copy of the enrollment application is or has been furnished to the subscriber or the subscriber's personal representative.
(B)
An individual contract or group certificate may [
only
] be contested
only
because of fraud or intentional misrepresentation of material fact made on the enrollment application. For small employer coverage, the misrepresentation must be other than a misrepresentation related to health status.
(C) For a group contract or certificate, the HMO may increase its premium to the appropriate level if the HMO determines that the subscriber made a material misrepresentation of health status on the application. The HMO must provide the contract holder 31-days' prior written notice of any premium rate change.
(14) Out-of-network services. Each contract between an HMO and a contract holder must provide that if medically necessary covered services are not available through network physicians or providers, the HMO must, on the request of a network physician or provider, within the time appropriate to the circumstances relating to the delivery of the services and the condition of the patient, but in no event to exceed five business days after receipt of reasonably requested documentation, allow a referral to a non-network physician or provider and must fully reimburse the non-network provider at the usual and customary or an agreed rate.
(A) For purposes of determining whether medically necessary covered services are available through network physicians or providers, the HMO must offer its entire network, rather than limited provider networks within the HMO delivery network.
(B) The HMO may not require the enrollee to change primary care physician or specialist providers to receive medically necessary covered services that are not available within the limited provider network.
(C) Each contract must further provide for a review by a specialist of the same or similar specialty as the type of physician or provider to whom a referral is requested before the HMO may deny a referral.
(15) Schedule of charges. A statement that discloses the HMO's right to change the rate charged with 60-days' written notice under Insurance Code §843.2071, concerning Notice of Increase in Charge for Coverage, and Insurance Code Chapter 1254, concerning Notice of Rate Increase for Group Health and Accident Coverage.
(16) Service area. A description and a map of the service area, with key and scale, that identifies the county, or counties, or portions of counties to be served, and indicates primary care physicians, hospitals, and emergency care sites. A ZIP code map and a physician and provider list may be used to meet the requirement.
(17) Termination due to attaining limiting age. A provision that a child's attainment of a limiting age does not operate to terminate the child's coverage while that child is incapable of self-sustaining employment due to intellectual disability or physical disability, and chiefly dependent on the subscriber for support and maintenance. The HMO may require the subscriber to furnish proof of incapacity and dependency within 31 days of the child's attainment of the limiting age and subsequently as required, but not more frequently than annually following the child's attainment of the limiting age.
(18) Termination due to student dependent's change in status. A provision regarding coverage of student dependents that complies with Insurance Code Chapter 1503, concerning Coverage of Certain Students, if applicable.
(19) Conformity with state law. A provision that if the agreement or certificate contains any provision or part of a provision not in conformity with Insurance Code Chapter 1271, concerning Benefits Provided by Health Maintenance Organizations; Evidence of Coverage; Charges, or other applicable laws, the remaining provisions and parts of provisions that can be given effect without the invalid provision or part of a provision are not rendered invalid but must be construed and applied as if they were in full compliance with Insurance Code Chapter 1271 and other applicable laws.
(20) Conformity with Medicare supplement minimum standards and long-term care minimum standards. Each group, individual, and conversion agreement, and group certificate must comply with Chapter 3, Subchapter T, of this title (relating to Minimum Standards for Medicare Supplement Policies), referred to in this paragraph as Medicare supplement rules, and Chapter 3, Subchapter Y, of this title (relating to Standards for Long-Term Care Insurance, Non-Partnership and Partnership Long-Term Care Insurance Coverage Under Individual and Group Policies and Annuity Contracts, and Life Insurance Policies That Provide Long-Term Care Benefits Within the Policy), referred to in this paragraph as long-term care rules, where applicable. If there is a conflict between the Medicare supplement or long-term care rules, or both, and the HMO rules, the Medicare supplement or long-term care rules will govern to the exclusion of the conflicting provisions of the HMO rules. Where there is no conflict, an HMO must follow the Medicare supplement, the long-term care rules, and the HMO rules where applicable.
(21)
Nonprimary care physician specialist as primary care physician. A provision that allows enrollees with chronic, disabling, or
life-threatening
[
life threatening
] illnesses to apply to the HMO's medical director to use a nonprimary care physician specialist as a primary care physician as set out in Insurance Code §1271.201, concerning Designation of Specialist as Primary Care Physician.
(22) Selected obstetrician or gynecologist. Group, individual, and conversion agreements, and group certificates, except small employer health benefit plans as defined by Insurance Code §1501.002, must contain a provision that permits an enrollee to select, in addition to a primary care physician, an obstetrician or gynecologist to provide health care services within the scope of the professional specialty practice of a properly credentialed obstetrician or gynecologist, and subject to the provisions of Insurance Code Chapter 1451, Subchapter F, concerning Access to Obstetrical or Gynecological Care. An HMO may not prevent an enrollee from selecting a family physician, internal medicine physician, or other qualified physician to provide obstetrical or gynecological care.
(A) An HMO must permit an enrollee who selects an obstetrician or gynecologist direct access to the health care services of the selected obstetrician or gynecologist without a referral by the enrollee's primary care physician or prior authorization or precertification from the HMO.
(B) Access to the health care services of an obstetrician or gynecologist includes:
(i) one well-woman examination per year;
(ii) care related to pregnancy;
(iii) care for all active gynecological conditions; and
(iv) diagnosis, treatment, and referral to a specialist within the HMO's network for any disease or condition within the scope of the selected professional practice of a properly credentialed obstetrician or gynecologist, including treatment of medical conditions concerning breasts.
(C) An HMO may require an enrollee who selects an obstetrician or gynecologist to select the obstetrician or gynecologist from within the limited provider network to which the enrollee's primary care physician belongs.
(D) An HMO may require a selected obstetrician or gynecologist to forward information concerning the medical care of the patient to the primary care physician. However, the HMO may not impose any penalty, financial or otherwise, on the obstetrician or gynecologist for failure to provide this information if the obstetrician or gynecologist has made a reasonable and good-faith effort to provide the information to the primary care physician.
(E) An HMO may limit an enrollee in the plan to self-referral to one participating obstetrician and gynecologist for both gynecological care and obstetrical care. The limitation must not affect the right of the enrollee to select the physician who provides that care.
(F)
An HMO must include in its enrollment form a space in which an enrollee may select an obstetrician or gynecologist as set forth in Insurance Code Chapter 1451, Subchapter F. The enrollment form must specify that the enrollee is not required to select an obstetrician or gynecologist[
,
] but may instead receive obstetrical or gynecological services from the enrollee's primary care physician or primary care provider. The enrollee must have the right at all times to select or change a selected obstetrician or gynecologist. An HMO may limit an enrollee's request to change an obstetrician or gynecologist to no more than four changes in any 12-month period.
(G) An enrollee who elects to receive obstetrical or gynecological services from a primary care physician (a family physician, internal medicine physician, or other qualified physician) must adhere to the HMO's standard referral protocol when accessing other specialty obstetrical or gynecological services.
(23) Diagnosis of Alzheimer's disease. An HMO that provides for the treatment of Alzheimer's disease must provide that a clinical diagnosis of Alzheimer's disease under Insurance Code Chapter 1354, concerning Eligibility for Benefits for Alzheimer's Disease, by a physician licensed in this state satisfies any requirement for demonstrable proof of organic disease.
(24) Drug coverage. An agreement that covers prescription drugs must comply with Insurance Code Chapter 1369, concerning Benefits Related to Prescription Drugs and Devices and Related Services, and Chapter 21, Subchapter V, of this title (relating to Pharmacy Benefits), as applicable.
(25) Inpatient care by nonprimary care physician. If an HMO or limited provider network provides for an enrollee's care by a physician other than the enrollee's primary care physician while the enrollee is in an inpatient facility, for example, hospital or skilled nursing facility, a provision that on admission to the inpatient facility a physician other than the primary care physician may direct and oversee the enrollee's care.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 2026.
TRD-202601805
Jessica Barta
General Counsel
Texas Department of Insurance
Earliest possible date of adoption: June 7, 2026
For further information, please call: (512) 676-6555
28 TAC §11.505
STATUTORY AUTHORITY.
TDI proposes the repeal of §11.505 under Insurance Code §§843.151 and 36.001.
Insurance Code §843.151 authorizes the commissioner to adopt reasonable rules to implement various parts of the Insurance Code related to HMOs and ensure adequate access to health care services.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
CROSS-REFERENCE TO STATUTE.
The repeal of §11.505 implements Insurance Code Chapter 1271.
§
11.505.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 2026.
TRD-202601818
Jessica Barta
General Counsel
Texas Department of Insurance
Earliest possible date of adoption: June 7, 2026
For further information, please call: (512) 676-6555
SUBCHAPTER
H.
STATUTORY AUTHORITY.
TDI proposes amendments to §11.701 under Insurance Code §§843.151, 1271.253, 1698.051, and 36.001.
Insurance Code §843.151 authorizes the commissioner to adopt reasonable rules to implement various parts of the Insurance Code as applicable to HMOs, including Insurance Code Chapter 1271.
Insurance Code §1271.253 provides that the commissioner may require the submission of any relevant information the commissioner considers necessary in determining whether to approve or disapprove a filing under Insurance Code Chapter 1271, Subchapter F.
Insurance Code §1698.051 requires that the commissioner by rule establish a process under which the commissioner will review individual and small group health benefit plan rates and rate changes for compliance with Insurance Code Chapter 1698 and other applicable state and federal laws, including 42 USC §§300gg, 300gg-94, and 18032(c) and those sections' implementing regulations, including rules establishing geographic rating areas.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
CROSS-REFERENCE TO STATUTE.
The amendments to §11.701 implement Insurance Code Chapter 1271 and Chapter 1698.
§
11.701.
(a) No schedule of charges, formula, or method for calculating the schedule of charges may be used until a copy of the formula or method for calculating the schedule of charges with supporting documentation has been filed with the commissioner, as required by §11.703 of this title (relating to Filings and Supporting Documentation) and consistent with Chapter 3, Subchapter A of this title (relating to Submission Requirements For Filings and Departmental Actions Related to Such Filing) .
(b) The schedule of charges must include all charges made for group, conversion, or individual coverage.
(c) Any applicable schedule of charges must comply with the requirements under Chapter 3, Subchapter F, of this title (relating to Rate Review for Health Benefit Plans).
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 2026.
TRD-202601806
Jessica Barta
General Counsel
Texas Department of Insurance
Earliest possible date of adoption: June 7, 2026
For further information, please call: (512) 676-6555
SUBCHAPTER
J.
STATUTORY AUTHORITY.
TDI proposes amendments to §11.901 and §11.902 under Insurance Code §§843.151, 4151.006, and 36.001.
Insurance Code §843.151 authorizes the commissioner to adopt reasonable rules to implement various parts of the Insurance Code related to HMOs and ensure that enrollees have adequate access to health care services.
Insurance Code §4151.006 authorizes the commissioner to adopt rules that are fair, reasonable, and appropriate to augment and implement Insurance Code Chapter 4151, including rules establishing required contract provisions.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
CROSS-REFERENCE TO STATUTE.
The amendment to §11.901(b)(12) implements Insurance Code §1203.153 The amendment to §11.901(h) implements Insurance Code Chapter 1369 and SB 1236. Section 11.901(i) implements Chapter 1451, Subchapter D. Section 11.902(a)(7) implements §1451.1545 and §1451.157. The amendment to §11.902(a)(8) implements Insurance Code §4151.155. The amendment to §11.902(b) implements Insurance Code §832.322.
§
11.901.
(a) Physician and provider contracts, subcontracts, and arrangements must include provisions regarding a hold-harmless clause as described in Insurance Code §843.361, concerning Enrollees Held Harmless.
(1) A hold-harmless clause is a provision in a physician or health care provider agreement that obligates the physician or provider to look only to the HMO and not its enrollees for payment for covered services (except as described in the evidence of coverage issued to the enrollee).
(2) In compliance with Insurance Code §843.002, concerning Definitions, relating to an "uncovered expense," if a physician or health care provider agreement contains a hold-harmless clause, then the costs of the services will not be considered uncovered health care expenses in determining amounts of deposits necessary for insolvency protection under Insurance Code §843.405, concerning Deposit with Comptroller.
(3) The following is an example of an approvable hold-harmless clause: "(Physician or Provider) agrees that in no event, including, but not limited to, nonpayment by the HMO, HMO insolvency, or breach of this agreement, may (Physician or Provider) bill, charge, collect a deposit from, seek compensation, remuneration, or reimbursement from, or have any recourse against subscriber, enrollee, or persons other than the HMO acting on their behalf for services provided under this agreement. This provision does not prohibit collection of supplemental charges or copayments made in compliance with the terms of (applicable agreement) between the HMO and subscriber or enrollee. (Physician or Provider) further agrees that:
(A) this provision will survive the termination of this agreement regardless of the cause giving rise to termination and must be construed to be for the benefit of the HMO subscriber or enrollee; and
(B) this provision supersedes any oral or written contrary agreement now existing or later entered into between (Physician or Provider) and subscriber, enrollee, or persons acting on their behalf. Any modification, addition, or deletion to the provisions of this clause will be effective on a date no earlier than 15 days after the commissioner has received written notice of the proposed changes."
(b) Physician and provider contracts, subcontracts, and arrangements must include provisions:
(1) regarding retaliation as described in Insurance Code §843.281, concerning Retaliatory Action Prohibited;
(2) regarding continuity of treatment, if applicable, as described in Insurance Code §843.309, concerning Contracts with Physicians or Providers: Notice to Certain Enrollees of Termination of Physician or Provider Participation in Plan, and §843.362, concerning Continuity of Care; Obligation of Health Maintenance Organization;
(3) regarding written notification to enrollees receiving care from a physician or provider of the termination of that physician or provider in compliance with Insurance Code §843.308, concerning Notification of Patients of Deselected Physician or Provider, and §843.309;
(4) regarding posting of complaint notices in physician or provider offices as described in Insurance Code §843.283, concerning Posting of Information on Complaint Process Required, provided that a representative notice that complies with this requirement may be obtained from the Managed Care Quality Assurance Office, MC: LH-MCQA, Texas Department of Insurance, P.O. Box 12030, Austin, Texas 78711-2030, or the department's website at www.tdi.texas.gov;
(5) regarding indemnification of the HMO as described in Insurance Code §843.310, concerning Contracts with Physicians or Providers: Certain Indemnity Clauses Prohibited;
(6) regarding prompt payment of claims as described in Insurance Code Chapter 542, Subchapter B, concerning Prompt Payment of Claims; §1271.005, concerning Applicability of Other Law; and all applicable statutes and rules pertaining to prompt payment of clean claims, including Insurance Code Chapter 843, Subchapter J, concerning Payment of Claims to Physicians and Providers; and Chapter 21, Subchapter T, of this title (relating to Submission of Clean Claims) with respect to payment to the physician or provider for covered services rendered to enrollees;
(7) regarding capitation, if applicable, as described in Insurance Code §843.315, concerning Payment of Capitation; Assignment of Primary Care Physician or Provider, and §843.316, concerning Alternative Capitation System;
(8) regarding selection of a primary care physician or provider, if applicable, as described in Insurance Code §843.203, concerning Selection of Primary Care Physician or Provider;
(9) providing that a podiatrist, practicing within the scope of the law regulating podiatry, is permitted to furnish X-rays and non-prefabricated orthotics covered by the evidence of coverage as described in Insurance Code §843.311, concerning Contracts with Podiatrists;
(10) regarding the requirements of §21.3701 of this title (relating to Electronic Claims Filing Requirements) if the contract requires electronic submission of any information described by that section;
(11) requiring the preferred provider to comply with all applicable requirements of Insurance Code §1661.005, concerning Refund of Overpayment; and
(12) requiring a contracting physician or provider to retain in the contracting physician's or provider's records updated information concerning a patient's other health benefit plan coverage , consistent with Insurance Code §1203.153, concerning Uniform Coordination of Benefits Questionnaire Required .
(c) Physician and provider contracts and arrangements must include provisions entitling the physician or provider, on request, to all information necessary to determine that the physician or provider is being compensated in compliance with the contract. A physician or provider may make the request for information by any reasonable and verifiable means. The information provided must include a level of detail sufficient to enable a reasonable person with sufficient training, experience, and competence in claims processing to determine the payment to be made under the terms of the contract for covered services rendered to enrollees. The HMO may provide the required information by any reasonable method through which the physician or provider can access the information, including email, computer disks, or other electronic storage and transfer technology, paper, or access to an electronic database. Amendments, revisions, or substitutions of any information provided under this paragraph must comply with paragraph (4) of this subsection. The HMO must provide the fee schedules and other required information by the 30th day after the date the HMO receives the physician's or provider's request.
(1) The information provided must include a physician-specific or provider-specific summary and explanation of all payment and reimbursement methodologies that will be used to pay claims submitted by a physician or provider, including at a minimum, the:
(A) fee schedule, including, if applicable, CPT, HCPCS, CDT, ICD-9-CM, ICD-10-CM, ICD-11-CM, and successor codes, and modifiers:
(i) by which the HMO will calculate and pay all claims for covered services submitted by or on behalf of the contracting physician or provider; or
(ii) that pertains to the range of health care services reasonably expected to be delivered under the contract by that contracting physician or provider on a routine basis, along with a toll-free number or electronic address through which the contracting physician or provider may request the fee schedules applicable to any covered services that the physician or provider intends to provide to an enrollee, and any other information required by this subsection that pertains to the service for which the fee schedule is being requested if the HMO has not previously provided that information to the physician or provider;
(B) all applicable coding methodologies;
(C) all applicable bundling processes, which must be consistent with nationally recognized and generally accepted bundling edits and logic;
(D) all applicable downcoding policies;
(E) a description of any other applicable policy or procedure the HMO may use that affects the payment of specific claims submitted by or on behalf of the contracting physician or provider, including recoupment;
(F) any addenda, schedules, exhibits, or policies used by the HMO in carrying out the payment of claims submitted by or on behalf of the contracting physician or provider that are necessary to provide a reasonable understanding of the information provided under this subsection; and
(G) the published product name and version of any software the HMO uses to determine bundling and unbundling of claims.
(2) In the case of a reference to source information outside the control of the HMO as the basis for fee computation, such as state Medicaid or federal Medicare fee schedules, the information the HMO provides must clearly identify the source and explain the procedure by which the physician or provider may readily access the source electronically, telephonically, or as otherwise agreed to by the parties.
(3) Nothing in this subsection may be construed to require an HMO to provide specific information that would violate any applicable copyright law or licensing agreement. However, the HMO must supply, instead of any information withheld on the basis of copyright law or licensing agreement, a summary of the information that will allow a reasonable person with sufficient training, experience, and competence in claims processing to determine the payment to be made under the terms of the contract for covered services that are rendered to enrollees as required by paragraph (1) of this subsection.
(4) No amendment, revision, or substitution of any of the claims payment procedures or any of the information required to be provided by this subsection will be effective as to the contracting physician or provider, unless the HMO provides at least 90-calendar-days' written notice to the contracting physician or provider identifying with specificity the amendment, revision, or substitution. An HMO may not make retroactive changes to claims payment procedures or any of the information required to be provided by this subsection. Where a contract specifies mutual agreement of the parties as the sole mechanism for requiring amendment, revision, or substitution of the information required by this subsection, the written notice specified in this section does not supersede the requirement for mutual agreement.
(5) The HMO must provide the information required by paragraphs (1) - (4) of this subsection to the contracting physician or provider by the 30th day after the date the HMO receives the contracting physician's or provider's request.
(6) A physician or provider receiving information under this subsection may not:
(A) use or disclose the information for any purpose other than:
(i) the physician's or provider's practice management;
(ii) billing activities;
(iii) other business operations; or
(iv) communications with a governmental agency involved in the regulation of health care or insurance;
(B) use the information to knowingly submit a claim for payment that does not accurately represent the level, type, or amount of services that were actually provided to an enrollee or to misrepresent any aspect of the services; or
(C) rely on information provided under this paragraph about a service as a representation that an enrollee is covered for that service under the terms of the enrollee's evidence of coverage.
(7) A physician or provider that receives information under this subsection may terminate the contract on or before the 30th day after the date the physician or provider receives the information without penalty or discrimination in participation in other health care products or plans. The contract between the HMO and physician or provider must provide for reasonable advance notice to enrollees being treated by the physician or provider before the termination consistent with Insurance Code §843.309.
(8) The provisions of this subsection may not be waived, voided, or nullified by contract.
(d) Physician and provider contracts, subcontracts, and arrangements must include provisions regarding written notification of termination to a physician or provider in compliance with Insurance Code §843.306, concerning Termination of Participation; Advisory Review Panel, and §843.307, concerning Expedited Review Process on Termination or Deselection, including provisions providing that:
(1) the HMO must provide notice of termination by the HMO to the physician or provider at least 90 days before the effective date of the termination;
(2) not later than 30 days following receipt of the written notification of termination, a physician or provider may request a review by the HMO's advisory review panel except in a case involving:
(A) imminent harm to patient health;
(B) an action by a state medical or dental board, another medical or dental licensing board, or another licensing board or government agency that effectively impairs the physician's or provider's ability to practice medicine, dentistry, or another profession; or
(C) fraud or malfeasance; and
(3) within 60 days after receipt of the physician's or provider's request for review, the advisory review panel must make its formal recommendation , and the HMO must communicate its decision to the physician or provider.
(e) On request by a participating physician or provider, an HMO must include a provision in the physician's or provider's contract providing that the HMO and the HMO's clearinghouse may not refuse to process or pay an electronically submitted clean claim because the claim is submitted together with or in a batch submission with a claim that is deficient. As used in this section, the term "batch submission" means "a group of electronic claims submitted for processing at the same time within a Health Insurance Portability and Accountability Act (HIPAA) standard ASC X12N 837 Transaction Set and identified by a batch control number." This subsection applies to a contract entered into or renewed on or after August 1, 2017. For a contract entered into or renewed before August 1, 2017, the law and regulations in effect at the time the contract was entered or renewed, whichever is later, governs.
(f) A contract between an HMO and a dentist may not limit the fee the dentist may charge for a service that is not a covered service under Insurance Code §843.3115, concerning Contracts with Dentists.
(g) A contract between an HMO and a provider, as that term is defined in Insurance Code §1458.001, concerning General Definitions, must comply with Insurance Code §1458.101, concerning Contract Requirements, to the extent applicable.
(h) A contract between an HMO and a pharmacy or pharmacist must comply with Insurance Code Chapter 1369, concerning Benefits Related to Prescription Drugs and Devices and Related Services.
§
11.902.
(a) An HMO may not:
(1) require a physician to use a hospitalist for a hospitalized patient by contract under Insurance Code §843.320, concerning Use of Hospitalist;
(2) refuse to contract with a nurse first assistant to be part of a provider network or refuse to reimburse a nurse first assistant under Insurance Code §843.3045, concerning Nurse First Assistant;
(3) require a physician to use the services of a nurse first assistant as defined by Occupations Code §301.354, concerning Nurse First Assistants; Assisting at Surgery by Other Nurses;
(4) refuse to contract with a podiatrist licensed by the Texas Department of Licensing and Regulation who joins the professional practice of a contracted physician or provider under Insurance Code §843.319, concerning Certain Required Contracts;
(5) refuse a request to identify a physician assistant or advanced practice registered nurse as a provider in the HMO's network under Insurance Code §843.312, concerning Physician Assistants and Advanced Practice Nurses;
(6)
employ an optometrist or therapeutic optometrist to provide a vision care product or service, pay an optometrist or therapeutic optometrist for a service not provided, or restrict or limit an optometrist's or therapeutic optometrist's choice of sources or suppliers of services or materials under Insurance Code §1451.156
,
[
(
]concerning Prohibited Conduct[
)
]; or
(7) engage in conduct that violates Insurance Code §1451.1545, concerning Participation in Vision Care Plan; Effect on Other Plans, or §1451.157, concerning Vision Plan Conduct;
(8)
[
(7)
] contract with a dentist to limit the fee the dentist may charge for a service that is not a covered service under Insurance Code §843.3115, concerning Contracts with Dentists
; or
[
.
]
(9) engage in conduct that violates Insurance Code §4151.155, concerning Certain Disclosures and Communications by Pharmacist or Pharmacy Protected.
(b) An HMO that uses steering or a tiered network to encourage an enrollee to obtain a health care service from a particular provider, as defined under Insurance Code Chapter 1458, concerning Provider Network Contract Arrangements, must do so in a manner that complies with the requirements of the Insurance Code, including the fiduciary duty imposed by Insurance Code §843.322, concerning Incentives to Use Certain Physicians and Providers, and Insurance Code §1458.101(i), concerning Contract Requirements, to act only for the primary benefit of the enrollee or contract holder. For the purposes of this section:
(1) "steering" refers to offering incentives to encourage enrollees to use specific physicians or providers;
(2) "tiered network" refers to a network of contracted physicians and providers in which an HMO assigns contracted physicians and providers to tiers within the network that are associated with different levels of cost sharing; and
(3)
violations of the fiduciary duty [
under Insurance Code §1458.101(i)
] will be determined by TDI based on an assessment of the HMO's conduct. [
Examples of conduct that would violate the HMO's fiduciary duty include, but are not limited to:
]
[(A) using a steering approach or a tiered network to provide a financial incentive as an inducement to limit medically necessary services, to encourage receipt of lower quality medically necessary services or receipt of services, or in violation of state or federal law;]
[(B) failing to implement reasonable processes to ensure that the contracted physicians and providers that enrollees are encouraged to use within any steering approach or tiered network are not of a materially lower quality as compared with contracted physicians and providers that enrollees are not encouraged to use;]
[(C) failing to implement reasonable processes to ensure that the HMO does not make materially false statements or representations about a physician's or provider's quality of care or costs; or]
[(D) failing to use objectively and verifiably accurate and valid information as the basis of any encouragement or incentive under this subsection.]
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 2026.
TRD-202601808
Jessica Barta
General Counsel
Texas Department of Insurance
Earliest possible date of adoption: June 7, 2026
For further information, please call: (512) 676-6555
SUBCHAPTER
O.
STATUTORY AUTHORITY.
TDI proposes amendments to §11.1402 under Insurance Code §843.151 and §36.001.
Insurance Code §843.151 authorizes the commissioner to adopt reasonable rules to implement various parts of the Insurance Code related to HMOs and ensure that enrollees have adequate access to health care services.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
CROSS-REFERENCE TO STATUTE.
The amendments to §11.1402 implement Insurance Code §843.305 and §1451.1545 as added by HB 3211.
§
11.1402.
(a)
An HMO that provides coverage for health care services or medical care through one or more physicians or providers is required by Insurance Code §843.305
,
[
(
]concerning Annual Application Period for Physician and Providers to Contract
,
[
)
] to provide a 20-calendar day period each calendar year during which any provider or physician in the geographic service area may apply to participate in each of the HMO's networks providing health care services or medical care under the terms and conditions established by the HMO for the provision of the services and the designation of the physicians and providers. Section 843.305 may not be construed to:
(1) require that an HMO use a particular type of provider or physician in its operation;
(2) require that an HMO accept a physician or provider of a category or type that does not meet the practice standards and qualifications established by the HMO; or
(3) require that an HMO contract directly with the physicians or providers.
(b) An HMO subject to Insurance Code §843.305 must publish a notice of an application period to physicians and providers both in the public notice section of at least one major newspaper with general circulation in each of its service areas and on the HMO's website. The notice must be published for at least five consecutive days during the period of January 2 through January 23 of each calendar year and must include the caption "Notice to Physicians and Providers" in bold type, the name and address of the HMO, what networks the HMO provides, and the specific dates of the 20-day period during which physicians and providers may make application to be a participating physician or provider in each network.
(c) An HMO must notify a physician or provider of acceptance or nonacceptance, in writing, no later than 90 days from receipt of an application for participation by that physician or provider in a network.
(d) An HMO must file a copy of the published notice with the department in compliance with §11.301 of this title (relating to Filing Requirements), for information, within 30 days of publication. The filing must include the following:
(1) the name of the newspaper and the beginning and ending date of the publication; and
(2) a copy of the website screen shots and the beginning and ending date of the publication.
(e) Notwithstanding other provisions in this section, with respect to vision care plans, an HMO must comply with Insurance Code §1451.1545, concerning Participation in Vision Care Plan; Effect on Other Plans.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 2026.
TRD-202601810
Jessica Barta
General Counsel
Texas Department of Insurance
Earliest possible date of adoption: June 7, 2026
For further information, please call: (512) 676-6555
SUBCHAPTER
Q.
STATUTORY AUTHORITY.
TDI proposes amendments to §11.1604 under Insurance Code §§843.151, 844.004, and 36.001.
Insurance Code §843.151 authorizes the commissioner to adopt reasonable rules to implement various parts of the Insurance Code related to HMOs and ensure that enrollees have adequate access to health care services.
Insurance Code §844.004 authorizes the commissioner to adopt rules to implement Insurance Chapter 844.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
CROSS-REFERENCE TO STATUTE.
The amendments to §11.1604 implement Insurance Code Chapter 843.
§
11.1604.
A primary HMO that enters into a contract with an ANHC in which the ANHC agrees to arrange for or provide health care services other than medical care or services ancillary to the practice of medicine, or with a provider HMO in which the provider HMO agrees to arrange for or provide health care services on a risk-sharing or capitated risk arrangement on behalf of the primary HMO as part of the primary HMO delivery network must:
(1) submit a monitoring plan to the department setting out:
(A) how the primary HMO will ensure that the ANHC or provider HMO has an effective administrative system for providing timely and accurate reimbursement to all physicians and providers under contract with the ANHC or provider HMO; and
(B) how the primary HMO will ensure that all HMO functions delegated or assigned under contract with the ANHC or provider HMO are consistent with full compliance by the primary HMO with all department regulatory requirements;
(2)
file with the department a copy of the form of the written contract with an ANHC or provider HMO, in accordance with
§11.301
[
§11.301(5)
] of this title (relating to Filing Requirements), that:
(A) requires that the ANHC or provider HMO cannot terminate the contract without 90-days written notice;
(B) contains a hold-harmless provision that prohibits the ANHC or provider HMO and its contracted physicians and providers from billing for or attempting to collect from HMO members, except for authorized copayments and deductibles, charges for covered services under any circumstance, including the insolvency of the primary HMO, ANHC, or provider HMO;
(C) contains a provision stating that nothing in the contract will be construed to in any way limit the HMO's authority or responsibility to comply with all of the department's regulatory requirements;
(D) includes the ANHC's or provider HMO's acknowledgment and agreement that:
(i) the primary HMO is required to establish, operate, and maintain a health care delivery system, quality assurance system, physician and provider credentialing system, and other systems and programs meeting department standards and is directly accountable for compliance with the standards;
(ii)
the role of the ANHC or provider HMO in contracting with the primary HMO is limited to implementing certain systems of the primary HMO,
using
[
utilizing
] standards approved by the primary HMO, and subject to the primary HMO's oversight and monitoring of the ANHC's or provider HMO's performance; and
(iii) the primary HMO may take necessary action to ensure that all HMO systems and functions that are delegated or assigned under the contract with the ANHC or provider HMO are in full compliance with all department regulatory requirements;
(E) requires the ANHC to make available to the primary HMO the ANHC's contracts with physicians and providers to ensure compliance with contractual requirements set out in subparagraphs (B) and (C) of this paragraph;
(F) requires the ANHC to provide the primary HMO with evidence of both financial solvency and financial ability to perform, such as a certified financial audit of the ANHC conducted by an independent certified public accountant, using generally accepted accounting and auditing principles; and
(G) requires the ANHC or provider HMO to provide the primary HMO, on at least a monthly basis and in a usable form necessary for audit purposes, the data necessary for the HMO to comply with department reporting requirements with respect to any services provided under the HMO-ANHC or HMO-provider HMO agreement, including the following data:
(i) number of primary HMO enrollees served or assigned to the ANHC or primary HMO to receive services, including the number added and terminated since the last reporting period;
(ii) form of the contracts and subcontracts between the ANHC and physicians and providers who will be providing services to enrollees of the primary HMO and any material changes to the contracts and subcontracts;
(iii) copayments received by the ANHC or provider HMO;
(iv) summary of the amounts paid by the ANHC or provider HMO to physicians and providers;
(v) methods by which physicians and providers were paid by the ANHC or provider HMO, for example, capitation, fee-for-services, or other risk-sharing arrangements;
(vi) utilization data;
(vii) summary of the amounts paid by the ANHC or provider HMO for administrative services relating to the primary HMOs;
(viii) the time that claims and debts related to claims owed by the ANHC or provider HMO have been pending;
(ix) information required for the primary HMO to be able to file claims for reinsurance, coordination of benefits, and subrogation;
(x) physician and provider and enrollee satisfaction data;
(xi) complaint data;
(xii) documentation of any inquiry or investigation of the ANHC or provider HMO, or any individual subcontracting physician or provider, made by regulatory agencies, and documentation of the final resolution of the inquiry or investigation; and
(xiii) any other data necessary to ensure proper monitoring and control of the primary HMO delivery network by the primary HMO;
(3) conduct an on-site audit of the ANHC or provider HMO at least annually, or more frequently on indication of material noncompliance, to obtain information necessary to verify compliance with all of the department's regulatory requirements, and provide written documentation of each audit to the department on request; and
(4) take prompt action to correct any failure by the ANHC or provider HMO to comply with the department's regulatory requirements relating to any matters delegated by the primary HMO to the ANHC or provider HMO and necessary to ensure the primary HMO's compliance with the regulatory requirements.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 2026.
TRD-202601813
Jessica Barta
General Counsel
Texas Department of Insurance
Earliest possible date of adoption: June 7, 2026
For further information, please call: (512) 676-6555
SUBCHAPTER
Z.
STATUTORY AUTHORITY.
TDI proposes to amend §11.2503 under Insurance Code§1702.006 and §36.001.
Insurance Code §1702.006 authorizes the commissioner to adopt reasonable rules necessary to implement Insurance Code Chapter 1702.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
CROSS-REFERENCE TO STATUTE.
The amendments to §11.2503 implement Insurance Code Chapter 1702, as added by HB 2221.
§
11.2503.
(a) An HMO may not consider an in-plan covered service to be a benefit provided under the point-of-service rider.
(b) An HMO may not require an enrollee to use either the point-of-service rider benefits or in-plan covered services first.
(c) An HMO that includes limited provider networks:
(1) may not limit the access, under the point-of-service rider, of an enrollee whose in-plan covered services are restricted to the limited provider network, to either participating physicians and providers or nonparticipating physicians and providers;
(2) may not impose cost-sharing arrangements for an enrollee whose in-plan covered services are restricted to a limited provider network, and who, through the point-of-service rider, accesses a participating physician or provider outside the limited provider network, that differ from the cost-sharing arrangements for in-plan covered services obtained by the enrollee from a physician or provider in the limited provider network; and
(3)
may provide for cost-sharing arrangements for benefits obtained from nonparticipating physicians and providers that are different from the cost sharing arrangements for in-plan covered services, provided that coinsurance required under a point-of-service rider must never exceed
50%
[
50 percent
] of the total amount to be covered.
(d)
An HMO that issues or offers to issue a point-of-service rider plan is subject, to the same extent as the HMO is subject in issuing any other health plan product, to all applicable provisions of Insurance Code Chapters 541
,
[
(
]concerning Unfair Methods of Competition and Unfair or Deceptive Acts or Practices
;
[
),
] 542
,
[
(
]concerning Processing and Settlement of Claims
;
[
),
] 543
,
[
(
]concerning Prohibited Practices Related to Policy or Certificate of Membership
;
[
),
] 544
,
[
(
]concerning Prohibited Discrimination
;
[
),
] 547
,
[
(
]concerning False Advertising by Unauthorized Insurers
;
[
),
] 843
,
[
(
]concerning Health Maintenance Organizations
;
[
), and
] 1273
,
[
(
]concerning Point-Of-Service Plans
; and 1702, concerning Regulation of Certain Trade Practices
[
)
].
(e) A point-of-service rider plan offered under this subchapter must contain:
(1) a point-of-service rider that:
(A) includes coverage that corresponds to all in-plan covered services provided in the evidence of coverage as well as coverage that is provided to an enrollee as part of the enrollee's in-plan coverage through separate riders attached to the evidence of coverage;
(B) may include benefits in addition to in-plan covered services;
(C) may limit or exclude coverage for benefits that do not correspond to in-plan covered services;
(D) may not limit coverage for benefits that correspond to in-plan covered services except as provided in subparagraphs (E), (F), and (G) of this paragraph;
(E)
may include reasonable out-of-pocket limits and annual and lifetime benefit allowances that differ from limits or allowances on in-plan covered services provided under other riders attached to the evidence of coverage
as
[
so
] long as the allowances and limits comply with applicable federal and state laws;
(F)
may provide for cost-sharing arrangements that are different from the cost-sharing arrangements for in-plan covered services, provided that coinsurance required under a point-of-service rider must never exceed
50%
[
50 percent
] of the total amount to be covered;
(G) may be reduced by benefits obtained as in-plan covered services;
(H) may not reduce or limit in-plan covered services in any way by coverage for benefits obtained by an enrollee under the point-of-service rider;
(I) if applicable, must disclose:
(i) how the point-of-service rider cost-sharing arrangements differ from those in the evidence of coverage;
(ii) any reduction of benefits as set forth in subparagraph (G) of this paragraph;
(iii) any deductible that must be met by the enrollee under the point-of-service rider; and
(iv) whether copayments made for in-plan covered services apply toward the point-of-service rider deductible;
(J) must provide coverage for services obtained without the HMO's authorization from a participating physician or provider, but the enrollee must comply with any precertification requirements as set forth in subparagraph (L) of this paragraph that are applicable to the point-of-service rider;
(K) must include a description of how an enrollee may access out-of-plan covered benefits under the point-of-service rider, including coverage contained in other riders attached to the evidence of coverage;
(L)
must disclose all precertification requirements for coverage under the point-of-service rider including any penalties for failure to comply with any precertification or cost containment provisions, provided that the penalties will not reduce benefits more than
50%
[
50 percent
] in the aggregate;
(M)
if it is issued to a group, must contain provisions that comply with Insurance Code Chapter 1251, Subchapter C, [
(
]concerning Partnership for Long-Term Care Program[
)
]; and
(N)
if it is issued to an individual, must contain provisions that comply with Insurance Code §§1201.211 - 1201.217
,
[
(
]concerning Policy Provision: Notice of Claim, Policy Provision: Claim Forms, Policy Provision: Proof of Loss, Policy Provision: Time of Payment of Claims, Policy Provision: Payment of Claims, Policy Provision: Physical Examinations and Autopsy, Policy Provision: Legal Actions[
)
];
(2) an evidence of coverage that includes a description and reference to the point-of-service rider sufficient to notify a prospective or current enrollee that the plan provides the option of accessing participating physicians and providers as well as nonparticipating physicians and providers for out-of-plan covered benefits, and that accessing these benefits through the point-of-service rider may involve greater costs than accessing corresponding in-plan covered services; and
(3) a side-by-side summary of the schedule of the corresponding coverage for services, benefits, and supplies available under the point-of-service rider and services, benefits, and supplies available in the evidence of coverage that together constitute the point-of-service rider plan.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 2026.
TRD-202601816
Jessica Barta
General Counsel
Texas Department of Insurance
Earliest possible date of adoption: June 7, 2026
For further information, please call: (512) 676-6555
CHAPTER 21. TRADE PRACTICES
SUBCHAPTER
X.
The Texas Department of Insurance (TDI) proposes to repeal 28 TAC §21.3202, concerning physician ranking requirements, and replace it with new §21.3202, concerning designated organizations for physician ranking, which designates organizations whose standards may be used by health benefit plan issuers for physician rankings. The proposed repeal and new section are necessary to implement Senate Bill 926, 89th Legislature, 2025.
EXPLANATION. The proposed repeal and replacement of §21.3202 implement Insurance Code §1460.003 and §1460.005. Chapter 1460 was added by House Bill 1888, 81st Legislature, 2009, to address the requirements for health benefit plan issuers when making certain comparisons of physicians. Under HB 1888, issuers could make only certain comparisons of physicians, using nationally recognized standards and guidelines adopted by the commissioner. SB 926 made substantive changes to Insurance Code Chapter 1460 by removing the list of nationally recognized organizations that establish guidelines and performance measures, and instead providing criteria that an organization and its standards must meet to be eligible to be designated by TDI rules.
Under SB 926, a health benefit plan issuer may rank physicians or classify physicians into tiers based on performance only if the standards used in the ranking are developed or prescribed by an organization designated by the commissioner. Insurance Code §1460.005 provides amended eligibility criteria that organizations must meet to be designated.
SB 926 also extends the commissioner's enforcement authority. Insurance Code §1460.007(c) states that the commissioner shall prohibit a health benefit plan issuer from using a ranking or classification system for not less than 12 consecutive months if the commissioner determines that the health benefit plan issuer has engaged in a pattern of discrepancies, falsehoods, or violations described by §1460.003(a-1).
Additionally, SB 926 amended the due process protections that health benefit plan issuers are required to provide to affected physicians.
Since the passage of SB 926, TDI has been receiving nominations of organizations that the commissioner should designate to implement Insurance Code Chapter 1460. On November 20, 2025, TDI also issued a public request for such nominations. TDI has received nominations of the following entities:
- Any national medical specialty society, as defined in Insurance Code Chapter 1460;
- Blue Health Intelligence (BHI);
- CareMetro;
- Core Quality Measures Collaborative (CQMC);
- Denniston Data Inc. (DDI);
- Global Appropriateness Measures (GAM);
- IntegerHealth;
- Joint Commission;
- Motive Medical Intelligence;
- National Committee for Quality Assurance (NCQA);
- National Quality Forum (NQF);
- Partnership for Quality Measures (PQM);
- Patient Centered Episode System (PACES);
- Purchaser Business Group on Health (PBGH);
- United States Department of Health and Human Services (HHS), including the Agency for Healthcare Research and Quality (AHRQ), Centers for Disease Control and Prevention (CDC), Centers for Medicare and Medicaid Services (CMS), Food and Drug Administration (FDA), and National Institutes of Health (NIH);
- U.S. Preventive Services Task Force (USPSTF);
- Commission on Accreditation of Rehabilitation Facilities (CARF® International); and
- Utilization Review Accreditation Commission (URAC).
Proposed new §21.3202 includes the nominated organizations for commissioner designation under Insurance Code Chapter 1460. Two nominated organizations, CARF and URAC, are excluded from the list of proposed organizations because they indicated that they did not wish to be designated.
TDI sent a survey to each nominated organization (other than medical specialty societies, and federal agencies and task forces) to assess whether the organization and its standards meet the statutory criteria. TDI's determination regarding each entity will be based on survey responses, publicly available information, and comments received. For some of the listed organizations, eligibility has not been clearly established, and detailed comments are encouraged in support of, or opposition to, all of them. For example, comments are welcome on whether an organization is "unbiased" under Insurance Code §1460.005(c)(1)(B), whether an organization's standards were developed by "physicians currently in clinical practice," consistent with Insurance Code §1460.006, whether an organization's standards are "nationally recognized" under Insurance Code §1460.005(c)(2)(A)(i), and whether an organization qualifies even if its standards do not themselves reference physicians' ability to "report data, evidentiary, factual, or mathematical discrepancies, errors, omissions, or faulty assumptions" under Insurance Code §1460.005(c)(2)(B).
Note that if new entities are suggested for designation in comments on this proposal, it is likely that they will not be considered in this rulemaking due to the absence of an opportunity for the public to comment on them. However, they may be considered in future rulemaking.
In separate proposals TDI will propose to amend 28 TAC Chapters 3 and 11 to make changes to implement portions of SB 926 that amend Insurance Code Chapters 1301 and 843.
A description of the new section follows.
Repeal of §21.3202. TDI proposes to repeal §21.3202.
New §21.3202. Designated Organizations for Physician Ranking.
Proposed new §21.3202 specifically lists the designated organizations whose standards health benefit plan issuers may use when ranking or classifying physicians.
New §21.3202(a) lists the organizations designated by the commissioner under Insurance Code Chapter 1460. New §21.3202(b) provides that the commissioner may enter an order designating a qualified entity on an interim basis, which would be followed by a designation by rule within three years in order to continue. New §21.3202(c) specifies that a health benefit plan issuer retains responsibility for compliance with the requirements of Insurance Code Chapter 1460.
FISCAL NOTE AND LOCAL EMPLOYMENT IMPACT STATEMENT. Rachel Bowden, director of the Regulatory Initiatives Office, has determined that during each year of the first five years the proposed repeal and new section are in effect, there will be no measurable fiscal impact on state and local governments as a result of enforcing or administering the amendments, other than that imposed by statute. Ms. Bowden made this determination because the proposed amendments do not increase or decrease state revenues or expenditures, and because local governments are not involved in enforcing or complying with the proposed amendments.
Ms. Bowden does not anticipate a measurable effect on local employment or the local economy as a result of this proposal.
PUBLIC BENEFIT AND COST NOTE. For each year of the first five years the proposed repeal and new section are in effect, Ms. Bowden expects that administering the proposed rule will have the public benefit of designating the organizations to develop or prescribe the standards required for health benefit plan issuers to rank or classify physicians. These amendments ensure that TDI's rules conform to Insurance Code Chapter 1460 and promote a transparent system of physician ranking that is based on standards developed or prescribed by designated organizations meeting the statutory criteria.
Ms. Bowden expects that while some designated organizations make standards for ranking or classifying physicians freely available, others may charge fees to access the standards. Multiple organizations are designated in the proposed rule, so any fees may vary. Nonetheless, the requirement to use designated organizations is statutory, so all associated costs are also attributable to statute and do not result from enforcement or administration of the proposed rule. Thus, the proposed repeal and new section will not increase the cost of compliance beyond what is already required by Insurance Code Chapter 1460. Issuers may choose to avoid cost by using standards that are available for free or choosing not to rank or classify physicians.
ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS. TDI has determined that the proposed repeal and new section will not have an adverse economic effect on small or micro businesses, or on rural communities. The rule does not apply to rural communities. Small or micro businesses are not required by statute or by this proposed rule to perform physician ranking. While costs may arise for businesses that choose to perform physician ranking and to use standards that require a fee, all businesses, including small and microbusinesses, can choose to use standards from organizations that provide them at no cost. As a result, and in accordance with Government Code §2006.002(c), TDI is not required to prepare a regulatory flexibility analysis.
EXAMINATION OF COSTS UNDER GOVERNMENT CODE §2001.0045. TDI has determined that this proposal may impose costs on regulated persons that choose to perform physician ranking and to use standards that require a fee. However, regulated persons may choose to instead use standards that are available at no cost. In addition, no additional rule amendments are required under Government Code §2001.0045 because the proposed amendments to §21.3202 are necessary to implement legislation. The proposed rule implements Insurance Code Chapter 1460, as amended by SB 926.
GOVERNMENT GROWTH IMPACT STATEMENT.
TDI has determined that for each year of the first five years that the proposed repeal and new section are in effect, the proposed rule:
- will not create or eliminate a government program;
- will not require the creation of new employee positions or the elimination of existing employee positions;
- will not require an increase or decrease in future legislative appropriations to the agency;
- will not require an increase or decrease in fees paid to the agency;
- will create a new regulation;
- will expand, limit, or repeal an existing regulation;
- will not increase or decrease the number of individuals subject to the rule's applicability; and
- will not positively or adversely affect the Texas economy.
The proposed rule will expand, limit, or repeal an existing regulation by removing and replacing the outdated rule applying Insurance Code Chapter 1460 requirements for health benefit plan issuers to rank or classify physicians.
TAKINGS IMPACT ASSESSMENT. TDI has determined that no private real property interests are affected by this proposal and that this proposal does not restrict or limit an owner's right to property that would otherwise exist in the absence of government action. As a result, this proposal does not constitute a taking or require a takings impact assessment under Government Code §2007.043.
REQUEST FOR PUBLIC COMMENT. TDI will consider any written comments on the proposal that are received by TDI no later than 5:00 p.m., central time, on June 8, 2026. Consistent with Government Code §2001.024(a)(8), TDI requests public comments on the proposal, including information related to the cost, benefit, or effect of the proposal and any applicable data, research, and analysis. Send your comments to ChiefClerk@tdi.texas.gov or to the Office of the Chief Clerk, MC: GC-CCO, Texas Department of Insurance, P.O. Box 12030, Austin, Texas 78711-2030.
The commissioner of insurance will also consider written and oral comments on the proposal in a public hearing under Docket No. 2863. This proposal will be part of a rule hearing docket that will begin at 10:00 a.m., central time, on June 1, 2026. TDI will hold the public hearing both remotely using online resources and in person at the Barbara Jordan State Office Building, 1601 Congress Avenue, Austin Texas 78701 in Room 2.034. Details of how to view and participate virtually in the public hearing will be made available on TDI's website at www.tdi.texas.gov/alert/event/index.html.
28 TAC §21.3202STATUTORY AUTHORITY. TDI proposes the repeal of §21.3202 under Insurance Code §1460.005(a) and (b) and §36.001.
Insurance Code §1460.005(a) requires the commissioner to adopt rules as necessary to implement Insurance Code Chapter 1460.
Insurance Code §1460.005(b) requires the commissioner to adopt rules as necessary to ensure that a health benefit plan issuer that uses a physician ranking system complies with the standards and guidelines described in Insurance Code §1460.005(c).
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
CROSS-REFERENCE TO STATUTE. The repeal of §21.3202 implements Insurance Code Chapter 1460.
§21.3202.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 2026.
TRD-202601799
Jessica Barta
General Counsel
Texas Department of Insurance
Earliest possible date of adoption: June 7, 2026
For further information, please call: (512) 676-6555
28 TAC §21.3202
STATUTORY AUTHORITY. TDI proposes new §21.3202 under Insurance Code §§1460.003(a), 1460.005(a) and (b) and 36.001.
Insurance Code §1460.003(a) prohibits health benefit plan issuers from ranking or classifying physicians into tiers based on performance unless, among other things, the standards used to rank or classify are developed or prescribed by an organization designated by the commissioner by rule.
Insurance Code §1460.005(a) requires the commissioner to adopt rules as necessary to implement Insurance Code Chapter 1460.
Insurance Code §1460.005(b) requires the commissioner to adopt rules as necessary to ensure that a health benefit plan issuer that uses a physician ranking system complies with the standards and guidelines described in Insurance Code §1460.005(c).
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
CROSS-REFERENCE TO STATUTE. New §21.3202 implements Insurance Code Chapter 1460.
§21.3202.
(a) For the purposes of Insurance Code Chapter 1460, concerning Standards Required Regarding Certain Physician Rankings by Health Benefit Plans, the commissioner designates the following organizations:
(1) any national medical specialty society, as defined in Insurance Code Chapter 1460;
(2) Blue Health Intelligence (BHI);
(3) CareMetro;
(4) Core Quality Measures Collaborative (CQMC);
(5) Denniston Data Inc. (DDI);
(6) Global Appropriateness Measures (GAM);
(7) IntegerHealth;
(8) Joint Commission;
(9) Motive Medical Intelligence;
(10) National Committee for Quality Assurance (NCQA);
(11) National Quality Forum (NQF);
(12) Patient Centered Episode System (PACES);
(13) Partnership for Quality Measures Evaluation and Maintenance (PQM);
(14) Purchaser Business Group on Health (PBGH);
(15) United States Department of Health and Human Services (HHS), including:
(A) the Agency for Healthcare Research and Quality (AHRQ);
(B) Centers for Disease Control and Prevention (CDC);
(C) Centers for Medicare and Medicaid Services (CMS);
(D) Food and Drug Administration (FDA), and;
(E) National Institutes of Health; and;
(16) United States Preventive Services Task Force (USPSTF).
(b) If an entity meets the requirements for designation under Insurance Code Chapter 1460, the commissioner may enter an order designating the entity on an interim basis as one whose standards may be used by health benefit plan issuers for the ranking or tiering of physicians consistent with Insurance Code §1460.003, concerning Physician Ranking Requirements. Interim designations will not be for a period longer than three years and will not be renewed or extended.
(c) A health benefit plan issuer retains ultimate responsibility for compliance with the requirements of Insurance Code Chapter 1460, including ensuring that any standard used to rank physicians or classify physicians into tiers based on performance meets the requirements of Insurance Code §§1460.003 - 1460.006.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 2026.
TRD-202601800
Jessica Barta
General Counsel
Texas Department of Insurance
Earliest possible date of adoption: June 7, 2026
For further information, please call: (512) 676-6555
CHAPTER 26. EMPLOYER-RELATED HEALTH BENEFIT PLAN REGULATIONS
The Texas Department of Insurance (TDI) proposes to amend 28 TAC §26.9 and §26.305, concerning small employer and large employer health benefit plans. The amendments implement Senate Bill 896, 89th Legislature, 2025.
EXPLANATION. Proposed amendments to §26.9 and §26.305 are necessary to implement SB 896, which expands the coverage period for newborn children under small and large employer health plans subject to Insurance Code Chapter 1501. SB 896 extends the end date of the mandatory coverage period from the 32nd day to the 61st day after a child's birth, and extends the deadline for an enrollee to notify the health plan and pay any additional premium from the 31st day to the 60th day after the date of birth.
In separate proposals also published in this issue of the Texas Register, TDI proposes amendments to 28 TAC Chapters 3 and 11 to implement multiple bills, including SB 896.
Descriptions of the sections' proposed amendments follow.
Section 26.9. The proposed amendments to §26.9 implement SB 896. Subsection (a)(4) is amended by replacing the reference to newborn coverage termination on the 32nd day after birth with the 61st day after birth. And the subsection is also amended by replacing the references to a 31-day premium payment deadline with a 60-day payment deadline.
Section 26.305. The proposed amendments to §26.305 implement SB 896. Subsection (f) is amended by replacing the reference to newborn coverage termination on the 32nd day after birth with the 61st day after birth. Subsection (f)(2) is amended by replacing the references to a 31-day premium payment deadline with a 60-day payment deadline. An amendment to subsection (h)(1) deletes "an" to correct a grammatical error.
The proposed amendments also include nonsubstantive editorial and formatting changes to conform the sections to TDI's current drafting style and plain language preferences and to improve the rule's clarity. These changes appear throughout the amended sections and include nonsubstantive text edits, including replacing the word "must" with "may," replacing the word "nonpayment" with "no payment," and corrections to punctuation.
FISCAL NOTE AND LOCAL EMPLOYMENT IMPACT STATEMENT. Rachel Bowden, director of the Regulatory Initiatives Office in the Life and Health Division, has determined that during each year of the first five years the proposed amendments are in effect, there will be no measurable fiscal impact on state and local governments as a result of enforcing or administering the amendments other than that imposed by the statute. Ms. Bowden made this determination because the proposed amendments do not add to or decrease state revenues or expenditures, and because local governments are not involved in enforcing or complying with the proposed amendments.
Ms. Bowden does not anticipate any measurable effect on local employment or the local economy as a result of this proposal.
PUBLIC BENEFIT AND COST NOTE. For each year of the first five years the proposed amendments are in effect, Ms. Bowden expects that administering the proposed amendments will have the public benefit of ensuring that TDI's rules conform to Insurance Code §1501.157 and §1501.607, as amended by SB 896.
Ms. Bowden expects that the proposed amendments will not increase the cost of compliance with Insurance Code §1501.157 and §1501.607 because it does not impose requirements beyond those in statute. As a result, the cost associated with extending the coverage period for newborn children does not result from the enforcement or administration of the proposed amendments.
ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS. TDI has determined that the proposed amendments will not have an adverse economic effect on small or micro businesses, or on rural communities. As a result, and in accordance with Government Code §2006.002(c), TDI is not required to prepare a regulatory flexibility analysis.
EXAMINATION OF COSTS UNDER GOVERNMENT CODE §2001.0045. TDI has determined that this proposal does not impose a possible cost on regulated persons. Even if it did, no additional rule amendments are required under Government Code §2001.0045 because the proposed amendments are necessary to implement legislation. The proposed rule implements Insurance Code §1501.157 and §1501.607, as amended by SB 896.
GOVERNMENT GROWTH IMPACT STATEMENT. TDI has determined that for each year of the first five years that the proposed amendments are in effect, the proposed rule:
- will not create or eliminate a government program;
- will not require the creation of new employee positions or the elimination of existing employee positions;
- will not require an increase or decrease in future legislative appropriations to the agency;
- will not require an increase or decrease in fees paid to the agency;
- will not create a new regulation;
- will expand, limit, or repeal an existing regulation;
- will not increase or decrease the number of individuals subject to the rule's applicability; and
- will not positively or adversely affect the Texas economy.
TAKINGS IMPACT ASSESSMENT. TDI has determined that no private real property interests are affected by this proposal and that this proposal does not restrict or limit an owner's right to property that would otherwise exist in the absence of government action. As a result, this proposal does not constitute a taking or require a takings impact assessment under Government Code §2007.043.
REQUEST FOR PUBLIC COMMENT. TDI will consider any written comments on the proposal that are received by TDI no later than 5:00 p.m., central time, on June 8, 2026. Consistent with Government Code §2001.024(a)(8), TDI requests public comments on the proposal, including information related to the cost, benefit, or effect of the proposal and any applicable data, research, and analysis. Send your comments to ChiefClerk@tdi.texas.gov or to the Office of the Chief Clerk, MC: GC-CCO, Texas Department of Insurance, P.O. Box 12030, Austin, Texas 78711-2030.
The commissioner of insurance will also consider written and oral comments on the proposal in a public hearing under Docket No. 2864. This proposal will be part of a rule hearing docket that will begin at 10:00 a.m., central time, on June 1, 2026. TDI will hold the public hearing both remotely using online resources and in person at the Barbara Jordan State Office Building, 1601 Congress Avenue, Austin Texas 78701 in Room 2.034. Visit www.tdi.texas.gov/alert/event/index.html for more info on the proposed rule, hearing, and comment submission.
SUBCHAPTER
A.
STATUTORY AUTHORITY. TDI proposes amendments to §26.9 under Insurance Code §1501.010(1) and §36.001.
Insurance Code §1501.010(1) directs the commissioner to adopt rules necessary to implement Insurance Code Chapter 1501.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
CROSS-REFERENCE TO STATUTE. Section 26.9 implements Insurance Code §1501.157, as amended by SB 896.
§26.9.
(a) All health benefit plans that provide coverage for small employers and their employees must comply with the following requirements.
(1)
A small employer carrier may not exclude any eligible employee or dependent (including a late enrollee who would otherwise be covered under a small employer health benefit plan), except to the extent permitted under Insurance Code §1501.156, [(]concerning Employee Enrollment; Waiting Period[)].
(2)
A small employer carrier may not limit or exclude (by use of rider, amendment, or other provision of the plan, applicable to a specific individual) coverage by type of illness, treatment, medical condition, or accident, except for preexisting conditions or diseases or an affiliation period, as permitted under Insurance Code Chapter 1501, [(]concerning Health Insurance Portability and Availability Act[)].
(3) A preexisting condition provision in a small employer health benefit plan may not apply to expenses incurred on or after the expiration of the 12 months following the effective date of coverage of the enrollee or late enrollee, except as authorized by paragraph (9)(B) of this subsection.
(4)
A small employer health benefit plan may not limit or exclude initial coverage of a newborn child of a covered employee. Any coverage of a newborn child of an employee under this subsection terminates on the 61st [32nd] day after the date of the birth of the child unless notification of the birth and any required additional premium are received by the small employer carrier not later than the 60th [31st] day after the date of birth. A small employer carrier may [must] not terminate coverage of a newborn child if the carrier's billing cycle does not coincide with this 60-day [31-day] premium payment requirement, until the next billing cycle has occurred and there has been no payment [nonpayment] of the additional required premium[,] within 30 days of the due date of the premium.
(5) A small employer health benefit plan may not limit or exclude initial coverage of an adopted child of an insured. An adopted child of an insured may be enrolled, at the option of the insured, within either:
(A) 31 days after the insured is a party in a suit for adoption; or
(B) 31 days of the date the adoption is final.
(6) Coverage of an adopted child of an insured under paragraph (5) of this subsection terminates unless notification of the adoption and any required additional premium are received by the small employer carrier not later than either:
(A) the 31st day after the insured becomes a party in a suit in which the adoption of the child by the insured is sought; or
(B) the 31st day after the date of the adoption. A small employer carrier may not terminate coverage of an adopted child if the carrier's billing cycle does not coincide with this 31-day premium payment requirement, until the next billing cycle has occurred and there has been nonpayment of the additional required premium, within 30 days of the due date of the premium.
(7) For purposes of paragraphs (4) and (6) of this subsection, "received by the small employer within a specified period" means that the item(s) must be either received or postmarked by the specified period.
(8) If a newborn or adopted child is enrolled in a health benefit plan or other creditable coverage within the periods specified in paragraph (4) or (5) of this subsection, and subsequently enrolls in another health benefit plan without a significant break in coverage, the other plan may not impose any preexisting condition exclusion or affiliation period with regard to the child. If a newborn or adopted child is not enrolled within the periods specified in paragraph (4) or (5) of this subsection, then in accordance with paragraph (9) of this subsection, the newborn or adopted child may be considered a late enrollee or excluded from coverage until the next open enrollment period.
(9) A small employer carrier must choose one of the methods set forth in subparagraph (A) or (B) of this paragraph for handling requests for enrollment as a late enrollee in any health benefit plan subject to this subchapter. The small employer carrier must use the same method for all small employer health benefit plans.
(A)
The eligible employee or dependent may be excluded from coverage and any application for coverage rejected until the next annual open enrollment period and, once enrolled, may be subject to a 12-month preexisting condition provision or, in the case of an HMO, may be subject to a 60-day affiliation provision, as described by Insurance Code §§1501.102 - 1501.104, [(]concerning Preexisting Condition Provision; Treatment of Certain Conditions as Preexisting Prohibited; and Affiliation Period[)].
(B) The eligible employee or dependent's application may be accepted immediately and the employee or dependent enrolled as a late enrollee during the plan year. If so enrolled, the preexisting condition provision imposed for a late enrollee may not exceed 18 months or, in the case of an HMO, the affiliation period may not exceed 90 days from the date of the late enrollee's application for coverage.
(C) The provisions of subparagraphs (A) and (B) of this paragraph do not apply to eligible employees or dependents under the special circumstances listed as exceptions under the definition of late enrollee in §26.4 of this title (relating to Definitions).
(D) Examples for applying subparagraphs (A) and (B) of this paragraph, in the case of both insurers and HMOs: Individual A requests coverage on October 1, 2014, after the enrollment period of July 1, 2014, through July 31, 2014, has ended. The next annual open enrollment period is July 1, 2015, through July 31, 2015. The effective date of coverage for persons enrolling during an open enrollment period is the beginning of the plan year, which is September 1 of each year.
(i) If the carrier is an insurer and has elected to exclude all applicants requesting late enrollment until the next open enrollment period, Individual A must reapply for coverage in July 2015 and the carrier may apply up to a 12-month preexisting condition period from the effective date of coverage, and as with any other enrollee, the preexisting condition period would begin on September 1, 2015, and expire on September 1, 2016.
(ii) If the carrier is an insurer and has elected to accept applications for late enrollment immediately and enroll the applicant during the plan year, the carrier may apply up to an 18-month preexisting condition period from the date of application. If Individual A applied for coverage on October 1, 2014, the preexisting condition period would begin on that date and expire on April 1, 2016.
(iii) If the carrier is an HMO and has elected to exclude all applicants requesting late enrollment until the next open enrollment period, Individual A must reapply for coverage in July 2015, and the carrier may apply up to a 60-day affiliation period, as with any other enrollee.
(iv) If the carrier is an HMO and has elected to accept applications for late enrollment immediately and enroll the applicant during the plan year, the carrier may apply up to a 90-day affiliation period from the day Individual A applied for coverage.
(10) A preexisting condition provision in a small employer health benefit plan may not apply to coverage for a disease or condition other than a disease or condition for which medical advice, diagnosis, care, or treatment was recommended or received from an individual licensed to provide the services under state law and operating within the scope of practice authorized by state law during the six months before the effective date of coverage.
(11)
A small employer carrier may not treat genetic information as a preexisting condition described by Insurance Code §1501.002, [(]concerning Definitions,[)] in the absence of a diagnosis of the condition related to the information.
(12) A small employer carrier may not treat a pregnancy as a preexisting condition described in Insurance Code §1501.002.
(13) A preexisting condition provision in a small employer health benefit plan does not apply to an individual who was continuously covered for an aggregate period of 12 months under creditable coverage that was in effect up to a date not more than 63 days before the effective date of coverage under the small employer health benefit plan, excluding any waiting period under the previous coverage. For example, Individual A has coverage under an individual policy for six months beginning on May 1, 2014, through October 31, 2014, followed by a gap in coverage of 61 days until December 31, 2014. Individual A is covered under an individual health plan beginning on January 1, 2015, for six months through June 30, 2015, followed by a gap in coverage of 62 days until August 31, 2015. Individual A's effective date of coverage under a small employer health benefit plan is September 1, 2015. Individual A has 12 months of creditable coverage and would not be subject to a preexisting condition exclusion under the small employer health benefit plan.
(14) In determining whether a preexisting condition provision applies to an individual covered by a small employer health benefit plan, the small employer carrier must credit the time the individual was covered under creditable coverage if the previous coverage was in effect at any time during the 12 months preceding the effective date of coverage under a small employer health benefit plan. Any waiting period that applied before that coverage became effective also must be credited against the preexisting condition provision period. For instance, Individual B is covered under an individual health insurance policy for 18 months beginning May 1, 2014, through November 30, 2015, followed by a four-month gap in coverage from December 1, 2015, to March 31, 2016. On April 1, 2016, Individual B is covered under a group health plan for three months through June 30, 2016, followed by a two-month gap in coverage until August 31, 2016. Individual B's coverage became effective on September 1, 2016. Under this example, since there was a significant break in coverage, to determine the length of creditable coverage, the small employer carrier counts the creditable coverage the individual had for the 12-month period preceding the effective date of the individual's coverage under the small employer health benefit plan. Individual B has creditable coverage of six months and the issuer of the small employer health benefit plan may impose a preexisting condition limitation for six months on Individual B.
(15) A small employer may establish a waiting period in accordance with Insurance Code §1501.156. On completion of the waiting period and enrollment within the time frame allowed by §26.7(h) of this title (relating to Requirement to Insure Entire Groups), coverage must be effective no later than the next premium due date. Coverage may be effective at an earlier date as agreed between the small employer and the small employer carrier.
(16) An HMO may impose an affiliation period in accordance with Insurance Code §1501.104, if the period is applied uniformly without regard to any health-status-related factor. The affiliation period may not exceed two months for an enrollee, other than a late enrollee, and may not exceed 90 days for a late enrollee. An affiliation period under a plan must run concurrently with any applicable waiting period under the plan. An HMO may not impose any preexisting condition limitation, except for an affiliation period.
(17) The imposition of an affiliation period by an HMO does not preclude application of any applicable waiting period as determined by the employer for all new entrants under a health benefit plan.
(18) An affiliation period provision in a small employer health benefit plan does not apply to an individual who would not be subject to a preexisting condition limitation in accordance with paragraphs (12) and (13) of this subsection.
(b) To determine if preexisting conditions exist, a small employer carrier must ascertain the source of previous or existing coverage of each eligible employee or dependent at the time the employee or dependent initially enrolls into the health benefit plan provided by the small employer carrier. The small employer carrier has the responsibility to contact the source of the previous or existing coverage to resolve any questions about the benefits or limitations related to that coverage in the absence of a creditable coverage certification form.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 2026.
TRD-202601811
Jessica Barta
General Counsel
Texas Department of Insurance
Earliest possible date of adoption: June 7, 2026
For further information, please call: (512) 676-6555
SUBCHAPTER
C.
STATUTORY AUTHORITY. TDI proposes amendments to §26.305 under Insurance Code §1501.010(1) and §36.001.
Insurance Code §1501.010(1) directs the commissioner to adopt rules necessary to implement Insurance Code Chapter 1501.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
CROSS-REFERENCE TO STATUTE. Section 26.305 implements Insurance Code §1501.607, as amended by SB 896.
§26.305.
(a)
Periods provided for enrollment in and application for any health benefit plan provided to a large employer group must comply with the following.[:]
(1)
The [the] initial enrollment period for the employees meeting the large employer's participation criteria must extend at least 31 consecutive days after the employee's initial date of employment, or, if the waiting period exceeds 31 days, at least 31 consecutive days after the date the new entrant completes the waiting period for coverage.[;]
(2)
The [the] new entrant who meets the large employer's participation criteria must be notified of his or her opportunity to enroll at least 31 days in advance of the last date enrollment is permitted.[;]
(3)
A [a] new entrant's application for coverage is timely if he or she submits the application within 31 consecutive days following the initial date of employment, or following the date the new entrant is eligible for coverage:
(A) in person;
(B) by mail, postmarked by the end of the specified period; or
(C)
in an alternative method normally accepted by the large employer carrier, including facsimile transmission (fax), email, or web-based application.[; and]
(4)
The [the] large employer carrier must provide an annual open enrollment period of at least 31 consecutive days.
(b) If dependent coverage is offered to enrollees under a large employer health benefit plan, the initial enrollment period for the dependents must be at least 31 consecutive days, with a 31-consecutive-day annual open enrollment period.
(c) A new employee who meets the participation criteria of a covered large employer may not be denied coverage if the application for coverage is received by the large employer carrier not later than the 31st day after the later of:
(1) the date on which the employment begins; or
(2)
the date on which the waiting period established under Insurance Code §1501.606, [(]concerning Employee Enrollment; Waiting Period,[)] expires.
(d) If dependent coverage is offered to the enrollees under a large employer health benefit plan, a dependent of a new employee who meets the participation criteria established by the large employer may not be denied coverage if the application for coverage is received by the large employer carrier not later than the 31st day after the later of:
(1) the date on which the employment begins;
(2) the date on which the waiting period established under Insurance Code §1501.606 expires; or
(3) the date on which the dependent becomes eligible for enrollment.
(e) A large employer carrier may not exclude any eligible employee who meets the participation criteria or an eligible dependent, including a late enrollee, who would otherwise be covered under a large employer group.
(f)
A large employer health benefit plan may not limit or exclude initial coverage of a newborn child of a covered employee. Any coverage of a newborn child of an insured under this subsection terminates on the 61st [32nd] day after the date of the birth of the child unless:
(1) dependent children are eligible for coverage under the large employer health benefit plan; and
(2)
notification of the birth and any required additional premium are received by the large employer not later than the 60th [31st] day after the date of birth. A large employer carrier may not terminate coverage of a newborn child if the carrier's billing cycle does not coincide with this 60-day [31-day] premium payment requirement, until the next billing cycle has occurred and there has been no payment [nonpayment] of the additional required premium[,] within 30 days of the due date of the premium.
(g) If dependent children are eligible for coverage under the large employer health benefit plan, a large employer health benefit plan may not limit or exclude initial coverage of an adopted child of an insured.
(h) If dependent children are eligible for coverage under the large employer health benefit plan, an adopted child of an insured may be enrolled, at the option of the insured, within either:
(1)
31 days after the [an] insured is a party in a suit for adoption; or
(2) 31 days of the date the adoption is final.
(i) Coverage of an adopted child of an employee terminates unless notification of the adoption and any required additional premiums are received by the large employer not later than either:
(1) the 31st day after the insured becomes a party in a suit in which the adoption of the child by the insured is sought; or
(2) the 31st day after the date of the adoption. A large employer carrier may not terminate coverage of an adopted child if the carrier's billing cycle does not coincide with this 31-day premium payment requirement, until the next billing cycle has occurred and there has been nonpayment of the additional required premium within 30 days of the date of the premium.
(j) For purposes of this section, "received by the large employer" within a specified period means that the item(s) must be postmarked by the specified period.
(k) If a newborn or adopted child is enrolled in a health benefit plan or other creditable coverage within the periods specified in this section, and subsequently enrolls in another health benefit plan without a significant break in coverage, the other plan may not impose any preexisting condition exclusion with regard to the child. If a newborn or adopted child is not enrolled within the periods specified in this section, then in accordance with §26.306(h) of this title (relating to Exclusions, Limitations, Waiting Periods, Affiliation Periods, Preexisting Conditions, and Restrictive Riders), the newborn or adopted child may be considered a late enrollee or excluded from coverage until the next open enrollment period.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 2026.
TRD-202601814
Jessica Barta
General Counsel
Texas Department of Insurance
Earliest possible date of adoption: June 7, 2026
For further information, please call: (512) 676-6555