SECTION 21.2406. Definitions

Definitions. For purposes of this subchapter, the following terms have the meanings indicated, except where the context clearly indicates otherwise:

(1) Administrative denial--A denial of a claim that is not an adverse determination, including, but not limited to, denials of claims for noncovered benefits, duplicate claims, incorrect billing, and because an individual is not an enrollee.

(2) Adverse determination--A determination by a health benefit plan or utilization review agent that health care services or benefits provided or proposed to be provided to an enrollee are not medically necessary, appropriate, or are experimental or investigational. Consistent with Insurance Code Chapter 1369, concerning Benefits Related to Prescription Drugs and Devices and Related Services, the following are adverse determinations:

(A) a denial of a fail-first (or step therapy) protocol exception request; and

(B) an issuer's refusal to treat the drug as a covered benefit, if an enrollee's physician has determined that a drug is medically necessary and the drug is not included in the enrollee's plan formulary.

(3) Aggregate lifetime dollar limit--A dollar limitation on the total amount of specified benefits that may be paid under a health benefit plan for any coverage unit.

(4) Allowed amount--The dollar amount covered under the plan for a particular service or benefit, including the amount of cost sharing owed by the enrollee and the amount to be paid by the plan. This term refers both to the contracted amount for in-network services or benefits and the amount designated by the plan for out-of-network services or benefits.

(5) Annual dollar limit--A dollar limitation on the total amount of specified benefits that may be paid in a 12-month period under a health benefit plan for any coverage unit.

(6) Applied behavior analysis--The design, implementation, and evaluation of instructional and environmental modifications to produce socially significant improvements in human behavior that is consistent with the practice of applied behavior analysis as addressed in Occupations Code §506.003.

(7) Approved claim--A claim for a service or benefit that is determined, at initial review or upon receipt of additional information, to be covered and payable at the plan's allowed amount.

(8) Concurrent review--A form of utilization review for ongoing health care or for an extension of treatment beyond previously approved health care.

(9) Coverage unit--Coverage unit as described in §21.2408(a)(4) of this title (relating to Parity Requirements with Respect to Financial Requirements and Treatment Limitations).

(10) Cumulative financial requirements--Financial requirements that determine whether or to what extent benefits are provided based on accumulated amounts and include deductibles and out-of-pocket maximums. Cumulative financial requirements do not include aggregate lifetime or annual dollar limits.

(11) Cumulative quantitative treatment limitations--Treatment limitations that determine whether or to what extent benefits are provided based on accumulated amounts, such as annual or lifetime day or visit limits. The term includes a deductible, a copayment, coinsurance, or another out-of-pocket expense or annual or lifetime limit, or another financial requirement.

(12) Denial--An administrative denial or an adverse determination.

(13) Fail-first or step therapy--A treatment protocol that requires an enrollee to use a prescription drug or sequence of prescription drugs other than the drug that the enrollee's physician recommends for the enrollee's treatment before the health benefit plan provides coverage for the recommended drug.

(14) Financial requirements--Plan deductibles, copayments, coinsurance, or out-of-pocket maximums. Financial requirements do not include aggregate lifetime or annual dollar limits.

(15) Health benefit plan or plan--A plan that is subject to Insurance Code Chapter 1355, Subchapter F, concerning Coverage for Mental Health Conditions and Substance Use Disorders.

(16) Independent review--A system for final administrative review by an independent review organization (IRO) of an adverse determination regarding the medical necessity, the appropriateness, or the experimental or investigational nature of health care services or benefits.

(17) Individual market--Health benefit plans subject to Insurance Code Chapter 1355, Subchapter F, that are bought on an individual or family basis in which the contract holder is also personally enrolled under the plan, other than in connection with a group health plan.

(18) Internal appeal--A formal process by which an enrollee, an individual acting on behalf of an enrollee, or an enrollee's provider of record may request reconsideration of an adverse determination.

(19) Large group market--Health benefit plans subject to Insurance Code Chapter 1355, Subchapter F, that are sold to groups that have 51 or more members, whether through an employer or through an association.

(20) Market type--Individual, small group, or large group market.

(21) Medical or surgical (medical/surgical) benefit--A benefit with respect to an item or service for medical conditions or surgical procedures, as defined under the terms of the health benefit plan and in accordance with applicable federal and state law, but does not include mental health or substance use disorder benefits. Any condition defined by a plan as being or as not being a medical/surgical condition must be defined to be consistent with generally recognized independent standards of current medical practice (for example, the most recent edition of the ICD or state guidelines).

(22) Mental health benefit--A benefit with respect to an item or service for a mental health condition, as defined under the terms of a health benefit plan and in accordance with applicable federal and state law. Any condition defined by a health benefit plan as being or as not being a mental health condition must be defined to be consistent with generally recognized independent standards of current medical practice (for example, the most recent edition of the Diagnostic and Statistical Manual of Mental Disorders (DSM), the most recent edition of the ICD, or state guidelines).

(23) NQTL--Nonquantitative treatment limitation.

(24) Peer-to-peer review or physician-to-physician review--A utilization review process that may occur before an adverse determination is issued by a utilization review agent, consistent with Insurance Code §4201.206, concerning Opportunity to Discuss Treatment Before Adverse Determination.

(25) Plan design--A plan's discrete package of benefits, cost-sharing structure, provider network, plan type, quantitative treatment limitations, and nonquantitative treatment limitations.

(26) Plan documents--All instruments under which a plan is established or operated, including, but not limited to, policies, certificates of coverage, contracts of insurance, evidences of coverage, provider contracts, provider manuals, internal guidelines and procedures, medical guidelines, and other documents used in making claims determinations and conducting utilization reviews. Instruments under which the plan is established or operated includes the processes, strategies, evidentiary standards, and other factors used to apply a nonquantitative treatment limitation (NQTL) with respect to medical/surgical benefits and mental health/substance use disorder (MH/SUD) benefits under the plan.

(27) Plan type--A preferred provider organization (PPO) plan, exclusive provider organization (EPO) plan, health maintenance organization (HMO) plan, health maintenance organization-point of service (HMO-POS) plan, and indemnity policy.

(28) Preauthorization or prior authorization--A utilization review process in which an issuer conditions coverage of a health care service, benefit, or prescription drug on the issuer's approval of the provider's request to provide an enrollee the service, benefit, or drug. For purposes of this rule:

(A) preauthorization includes reauthorization of services or benefits that had received preauthorization, but for which the approval period has lapsed;

(B) preauthorization does not include utilization review needed to reauthorize ongoing services or benefits (concurrent review); and

(C) a request for preauthorization is one received during the reporting period, regardless of the date the claim is incurred.

(29) Prescription drugs--Drugs covered under a plan's prescription drug benefit.

(30) QTL--Quantitative treatment limitation.

(31) Reasonable method--To determine the dollar amount or the per member per month amount of plan payments for the substantially all or predominant analyses required by §21.2408 of this title, reasonable methods are:

(A) a projection based on claims data for the plan or the plan design, if there is sufficient claims data for a reasonable projection of future claims costs; or

(B) a projection based on appropriate and sufficient data (such as data from other similarly structured plans with similar demographics) to perform the analysis in compliance with applicable Actuarial Standards of Practice set by the Actuarial Standards Board if:

(i) there is not enough claims data;

(ii) the plan significantly changed its benefit package;

(iii) the plan experienced a significant workforce change that would impact claims costs; or

(iv) the group health plan (or the plan design) is new.

(32) Reported claims--Claims that are received by an issuer in a year, regardless of the incurred date, the final decision date, or a claim's pending status. For example, claims reported in 2020 could include claims incurred in 2019, claims with final decisions made in the first few months of 2020, or claims awaiting a determination.

(33) Retrospective review--The process of reviewing the medical necessity and reasonableness of health care that has been provided to an enrollee.

(34) Small group market--Health benefit plans subject to Insurance Code Chapter 1355, Subchapter F, that are sold to groups that have at least two but no more than 50 members.

(35) Substance use disorder benefit--A benefit with respect to an item, treatment, or service for a substance use disorder, as defined under the terms of a health benefit plan and in accordance with applicable federal and state law. Any disorder defined by the plan as being or as not being a substance use disorder must be defined to be consistent with generally recognized independent standards of current medical practice (for example, the most current version of the DSM, the most recent edition of the ICD, or state guidelines).

(36) Treatment limitations--This term includes limits on benefits based on the frequency of treatment, number of visits, days of coverage, days in a waiting period, or other similar limits on the scope or duration of treatment. Treatment limitations include both quantitative treatment limitations (QTLs), which are expressed numerically (such as 50 outpatient visits per year), and NQTLs, which otherwise limit the scope or duration of benefits for treatment under a plan. (An illustrative list of NQTLs is provided in §21.2409(b) of this title (relating to Nonquantitative Treatment Limitations).) A permanent exclusion of all benefits for a particular condition or disorder, however, is not a treatment limitation for purposes of this definition.

(37) Utilization review--A system for prospective, concurrent, or retrospective review of the medical necessity or appropriateness of health care services or benefits and a system for prospective, concurrent, or retrospective review to determine the experimental or investigational nature of health care services or benefits. The term does not include a review in response to an elective request for clarification of coverage.

Source Note: The provisions of this §21.2406 adopted to be effective September 7, 2021, 46 TexReg 5571