SECTION 11.2603. Requirements for Delegation by HMOs

(a) Any delegation of any function under Insurance Code Chapter 843 (concerning Health Maintenance Organizations) and Chapter 1272 (concerning Delegation of Certain Functions by Health Maintenance Organization), and other applicable insurance laws and regulations of this state by an HMO must comply with this subchapter.

(b) Oversight by the department does not relieve an HMO of responsibility for monitoring and oversight of its delegated entities.

(c) Before entering into, renewing, or amending a delegation agreement, an HMO must make a reasonable effort to evaluate the delegated entity's current and prospective ability to perform the functions to be delegated, including, but not limited to, the solvency and financial operations of the delegated entity and the projected financial effects of the agreement on the delegated entity.

(d) An HMO that delegates functions to a delegated entity must have a written contingency plan to resume any and all delegated functions, including, as applicable:

(1) quality of care;

(2) continuity of care, including a plan for transferring enrollees to new physicians and providers in the event of termination of the delegation agreement; and

(3) processing, adjudication, and payment of claims.

(e) The department may require an HMO to immediately terminate any delegation agreement to ensure that the HMO is in compliance with Insurance Code Chapter 843 and Chapter 1272 and other applicable insurance laws and regulations of this state.

(f) An HMO retains ultimate responsibility for any and all functions delegated.

(g) A delegated entity's failure to comply with applicable statutes or rules constitutes a violation of Insurance Code Chapter 843 and Chapter 1272 and other applicable insurance laws and regulations of this state by the delegating HMO.

(h) An HMO is responsible for monitoring each delegated entity with which it contracts to ensure compliance with all applicable statutes and rules, as well as for solvency.

(i) An HMO must report to the department, within a reasonable time, all penalties assessed against a delegated entity under the provisions of the delegation agreement.

(j) If an HMO cannot ensure that a delegated entity is performing all delegated functions in compliance with all applicable statutes, rules, or an order issued by the department under this subchapter, the HMO must resume all delegated functions from the delegated entity.

(k) If a license is required for any function delegated by an HMO, the HMO must ensure that the delegated entity or third party performing the function has a current appropriate license.

(l) On termination of a delegation agreement by either party, the HMO must notify the department.

Source Note: The provisions of this §11.2603 adopted to be effective August 1, 2017, 42 TexReg 2169