Proposed Rules Title 28

TITLE 28. INSURANCE

PART 1. TEXAS DEPARTMENT OF INSURANCE

CHAPTER 5. PROPERTY AND CASUALTY INSURANCE

SUBCHAPTER A. AUTOMOBILE INSURANCE

DIVISION 3. MISCELLANEOUS INTERPRETATIONS

The Texas Department of Insurance (TDI) proposes to amend 28 TAC §5.205, concerning the Motor Vehicle Crime Prevention Authority (MVCPA) pass-through fee. The amendments to §5.205 implement Senate Bill 224, 88th Legislature, 2023.

EXPLANATION. Amending §5.205 is necessary to implement SB 224, which amended Transportation Code §1006.153 to increase the MVCPA fee amount from $4 to $5 to help fund the detection and prevention of catalytic converter thefts. The proposed amendments replace the $4 fee amount and update the language in the notice that insurers must provide to policyholders when recouping the MVCPA fee.

To provide adequate time for insurers to update the notice, as required under subsection (b), TDI proposes an effective date of 90 days after the date the rule is adopted.

Descriptions of the section's proposed amendments follow.

Section 5.205. Subsection (a) is amended to remove the $4 fee amount. Instead of replacing the $4 fee amount with the updated $5 fee, the amended text states that the insurer must pay the MVCPA fee as set by Transportation Code §1006.153(b), which removes the need to update the fee amount if it is changed in the statute in the future.

Subsection (b) is amended to update the notice that an insurer must provide to a policyholder when the insurer seeks to recoup the MVCPA fee, adding that the detection and prevention of catalytic converter thefts is an activity that the MVCPA fee helps to fund.

Existing subsections (c) and (d) are removed because they contain instructions for updating and filing the notice and are based on a previous amendment. Insurers should have already made these updates to the notice required under subsection (b), making these subsections unnecessary.

A new subsection (c) is added to inform insurers that if the insurer recoups the fee from the policyholder, the insurer must file a new or revised notice with TDI. New subsection (c) also clarifies that an insurer does not need to include the actual fee amount in the filed notice. Rather, the insurer may use a variable field in the filed notice.

FISCAL NOTE AND LOCAL EMPLOYMENT IMPACT STATEMENT. Nicole Beall, manager, Property and Casualty Lines, 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 them, other than that imposed by the statute. Ms. Beall 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. Beall 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 amendments are in effect, Ms. Beall expects that administering the proposed amendments will have the public benefit of ensuring that TDI's rules conform to Transportation Code Chapter 1006. In addition, the proposed amendments will help policyholders understand why they are charged the MVCPA fee and what the fee funds.

Ms. Beall expects that the proposed amendments will not increase the cost of compliance with Transportation Code Chapter 1006 because the proposed amendments do not impose new requirements beyond those in the statute. The increased fee is required by the statute, not the rule. Transportation Code §1006.153 requires insurers to pay to the MVCPA a fee equal to $5 multiplied by the total number of years or portions of years during which a motor vehicle is covered by insurance. As a result, the costs associated with the increased fee and any filings needed to update the fee or the required notice do 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. The increased fee is required by the statute and is not a result of the rule. 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 the proposed amendments do not impose a cost on regulated persons. Even if the amendments did impose a cost, no additional rule amendments are required under Government Code §2001.0045 because the proposed amendments to §5.205 are necessary to implement legislation. The proposed amendments implement Transportation Code §1006.153, as amended by SB 224.

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 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 September 16, 2024. 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.

To request a public hearing on the proposal, submit a request before the end of the comment period 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 request for public hearing must be separate from any comments and received by TDI no later than 5:00 p.m., central time, on September 16, 2024. If a public hearing is held, TDI will consider written and oral comments presented at the hearing.

STATUTORY AUTHORITY. TDI proposes amendments to §5.205 under Transportation Code §1006.153 and Insurance Code §36.001.

Transportation Code §1006.153 provides that an insurer pay to the MVCPA a fee equal to $5 multiplied by the total number of motor vehicle years of insurance for insurance policies delivered, issued for delivery, or renewed by the insurer.

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 5.205 implements Transportation Code §1006.153.

§5.205.Motor Vehicle Crime Prevention Authority Pass-Through Fee.

(a) Each insurer must pay a fee [~~of $4.00~~] per "motor vehicle year of insurance" to the Motor Vehicle Crime Prevention Authority, as set [~~as required~~] by Transportation Code §1006.153(b), concerning Fee Imposed on Insurer [~~§1006.153~~]. The insurer is authorized to recoup some or all of this fee from the policyholder.

(b) If an insurer recoups the fee from the policyholder under subsection (a) of this section, the insurer must:

(1) provide the policyholder with a notice using the following or similar language, in at least 10-point type: "Your payment includes a $[_______] fee per vehicle each year. This fee helps fund (1) auto burglary, theft, and fraud prevention;[,] (2) criminal justice efforts;[~~, and~~] (3) trauma care and emergency medical services for victims of accidents due to traffic offenses; and (4) the detection and prevention of catalytic converter thefts. By law, this fee funds the Motor Vehicle Crime Prevention Authority.";

(2) include the notice on or with each motor vehicle insurance policy, as defined in 43 TAC §57.48 (relating to Motor Vehicle Years of Insurance Calculations), that is delivered, issued for delivery, or renewed in this state, including those policies issued through the Texas Automobile Insurance Plan Association; and

(3) if the notice language required by paragraph (1) of this subsection is provided somewhere other than the declarations page, renewal certificate, or billing, also include the following or similar language on the declarations page of the policy, renewal certificate, or billing: "Motor Vehicle Crime Prevention Authority Fee $[______] (See enclosed explanation)."

(c) An insurer that recoups the fee from policyholders must file with TDI a new or revised notice as required by subsection (b)(1) of this section. An insurer does not need to include the fee amount in the filed notice. Instead, the insurer can use a variable field for the fee amount, like this: "$[_______]."

~~[(c) An insurer may continue providing a notice used on or before the effective date of this section if the notice:]~~

~~[(1) contains the correct fee amount;]~~

~~[(2) includes "Motor Vehicle Crime Prevention Authority" in place of "Automobile Burglary and Theft Prevention Authority;" and]~~

~~[(3) has any statutory references removed or updated to change Tex. Rev. Civ. Stat. Ann. Art. 4413(37) to Transportation Code Chapter 1006.]~~

~~[(d) A notice that complies with subsection (c) of this section is considered similar to the notice language required by subsection (b) of this section.]~~

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 August 2, 2024.

TRD-202403567

Jessica Barta

General Counsel

Texas Department of Insurance

Earliest possible date of adoption: September 15, 2024

For further information, please call: (512) 676-6555

SUBCHAPTER E. TEXAS WINDSTORM INSURANCE ASSOCIATION

DIVISION 10. ELIGIBILITY AND FORMS

28 TAC §5.4905

The Texas Department of Insurance (TDI) proposes to amend 28 TAC §5.4905, concerning minimum retained premium. Amendments to §5.4905 implement House Bill 3208, 88th Legislature, 2023.

EXPLANATION. Amendments to §5.4905 are necessary to implement changes that HB 3208 made to Insurance Code §2210.204. HB 3208 limited the circumstances in which the Texas Windstorm Insurance Association (TWIA) must refund premium when an insured cancels an insurance policy.

Descriptions of the proposed amendments follow.

Section 5.4905. Amendments to subsection (a) clarify that the minimum retained premium provision is subject to Insurance Code §2210.204, and specify that--except as provided in the rule--the minimum retained premium on a TWIA policy is equal to the premium for the full annual policy term.

Existing subsection (b) is replaced by a new subsection (b). New subsection (b) still provides that a TWIA policy is subject to a $100 minimum retained premium if it is canceled for specific reasons, but it now refers to the reasons specified in Insurance Code §2210.204(d). It also specifies that reasons include a change in the majority ownership of the insured property, including foreclosure or the death of the policyholder.

A new subsection (c) is added that maintains the requirement from current subsection (b) that if any unearned premium remains after applying the minimum retained premium, then it must be refunded pro rata. Existing subsections (c) and (d) are redesignated as (d) and (e) to reflect the insertion of new subsection (c).

In addition, the proposed amendments include nonsubstantive changes to conform the section to the agency's current drafting style and plain language preferences, and to improve the rule's clarity. Examples include replacing "Association" with "TWIA" and the phrase "shall not" with "may not" and "shall be" with "is."

Amendments also delete obsolete language specifying the applicable minimum retained premium for policies effective before and after November 27, 2011. To clarify the section, existing text is restructured and language that is effectively duplicative is eliminated.

TDI invited public comment on an informal draft posted on TDI's website on May 13, 2024, through May 27, 2024. No comments were received.

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 amendments 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 those imposed by the statute. Mr. Muckerheide 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.

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 amendments are in effect, Mr. Muckerheide expects that administering them will have the public benefit of ensuring that TDI's rules conform to Insurance Code §2210.204.

Mr. Muckerheide expects that the proposed amendments will not increase the cost of compliance with Insurance Code §2210.204 because they do not impose requirements beyond those in the 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 the proposal did impose costs, no additional rule amendments would be required under Government Code §2001.0045 because the amendments to §5.4905 are necessary to implement legislation. The proposed rule implements Insurance Code §2210.204, as amended by HB 3208.

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.

STATUTORY AUTHORITY. TDI proposes amendments to §5.4905 under Insurance Code §2210.008(b) and §36.001.

Insurance Code §2210.008(b) provides that the commissioner may adopt rules that are reasonable and necessary to implement Insurance Code Chapter 2210.

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 5.4905 implements Insurance Code §2210.204.

§5.4905Minimum Retained Premium.

(a) Except as provided in this section and subject to Insurance Code §2210.204, concerning Cancellation of Certain Coverage, for cancellation of insurance coverage, the minimum retained premium on a TWIA [~~an Association~~] policy issued on an annual basis is equal to the premium for the full annual policy term. [~~shall be:~~]

~~[(1) equal to the greater of:]~~

~~[(A) 90 days of the annual policy term or $100, for policies that become effective on and after November 27, 2011; or]~~

~~[(B) 180 days of the annual policy term or $100, for policies that become effective before November 27, 2011; and]~~

~~[(2) fully earned on the effective date of the policy. Unearned premium in excess of the minimum retained premium set forth in this subsection shall be refunded pro-rata.]~~

(b) A TWIA policy is subject to a $100 minimum retained premium if it is canceled because of:

(1) any of the reasons specified in Insurance Code §2210.204(d); or

[~~(b)~~ An Association policy canceled due to the reasons specified in paragraphs (1) - (4) of this subsection is subject to the $100 minimum retained premium. The minimum retained premium shall be fully earned on the effective date of the policy. Unearned premium in excess of the minimum retained premium set forth in this subsection shall be refunded pro-rata.]

(2) [~~(1)~~] a [A] change in majority ownership of the insured property, including [~~sale of the insured property to an unrelated party, or~~] foreclosure of the insured property; or

~~[(2) the replacement of the Association policy with other similar coverage in the voluntary market;]~~

~~[(3) the removal of the item(s) insured under an Association policy due to a total loss of the item(s), including demolition of the item(s); or]~~

(3) [~~(4)~~] the death of the policyholder.

(c) Any unearned premium after the application of the minimum retained premium in this section must be refunded pro rata.

(d) [~~(c)~~] TWIA may [~~The Association shall~~] not issue a new or renewal policy to an applicant who owes premium on a prior TWIA [~~Association~~] policy.

(e) [~~(d)~~] The minimum retained premium may [~~shall~~] not create or extend coverage beyond the policy's effective cancellation date.

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 August 2, 2024.

TRD-202403568

Jessica Barta

General Counsel

Texas Department of Insurance

Earliest possible date of adoption: September 15, 2024

For further information, please call: (512) 676-6555

SUBCHAPTER J. RULES TO IMPLEMENT THE AMUSEMENT RIDE SAFETY INSPECTION AND INSURANCE ACT

28 TAC §§5.9001 - 5.9004, 5.9006 - 5.9014

The Texas Department of Insurance (TDI) proposes to amend 28 TAC §§5.9001 - 5.9004 and 5.9006 - 5.9014, concerning inspection of amusement rides. Proposed amendments implement House Bill 1553, 88th Legislature, 2023, which revised the definition of "amusement ride" in Occupations Code §2151.002. The proposed amendments also make nonsubstantive updates to the sections.

EXPLANATION. HB 1553 revised the definition of "amusement ride" in Occupations Code §2151.002 to exclude from the definition water slides in which passengers are carried along a course that is less than 200 feet in length, are substantially constructed from vinyl or vinyl-coated polyester, and are not mechanically inflated using a continuous airflow device. The current definition of "amusement ride" in §5.9002 uses the language of the previous statutory definition, so the rule text needs to be updated to reflect the change made to the statute.

To reduce the need for additional rule amendments if the definition of "amusement ride" in Occupations Code §2151.002 is revised in the future, the definition of "amusement ride" is changed to state that it is "as defined in Occupations Code §2151.002," rather than restating the statute's definition in rule text. Similar amendments are made to the definitions of other terms that are already defined in Occupations Code §2151.002.

Proposed amendments also make revisions to the rule text to address changes since the rules were last adopted or amended, including revising text for consistent use of form names and to update form revision dates where necessary, and updating the program area name and mailing address for form submissions.

In addition, amendments make nonsubstantive changes for consistency with current TDI rule text drafting preferences. These include revising use of the word "shall" for consistency with TDI's current plain language preferences; and removing the unnecessary designation of "TDI" as an acronym in separate sections, since "TDI" is a defined term applicable throughout the subchapter. These amendments are not noted in the following descriptions of the sections unless it is necessary or appropriate to provide additional context or explanation.

Details of the sections' proposed amendments follow.

Section 5.9001. Amendments to §5.9001 update citations to the Occupations Code in the section's initial sentences and in paragraph (1), update citations to the Insurance Code in paragraphs (4) and (6), and revise punctuation in paragraph (7).

Section 5.9002. Amendments to §5.9002 revise the definitions of "Amusement ride," "Class A amusement ride," "Class B amusement ride," and "Mobile amusement ride" to remove text that repeats statutory language. Amendments instead define the terms by pointing to the definitions in Occupations Code §2151.002. Amendments also update citations to the Occupations Code and other codes throughout the section, replace the word "five" with the numeral "5" in paragraph (6)(B), lowercase "commissioner of insurance" in paragraph (7), remove a duplicate acronym designation for "ASTM" in paragraph (8), and replace "his or its" with "that person or entity's" in paragraph (13).

Section 5.9003. An amendment to §5.9003 updates the internet address where an amusement ride owner or operator may pay the annual fee required by the Amusement Ride Safety Inspection and Insurance Act. Additional changes revise punctuation, replace the phrase "over the Internet" with the word "online," and remove an unnecessary use of the word "online."

Section 5.9004. Amendments throughout §5.9004 update citations to the Occupations Code and make minor nonsubstantive wording and grammar changes for clarity. References to forms in subsections (b)(5), (b)(8), (c), (c)(11), (c)(12), (e)(3), and (f) are also revised, as are program area names in subsections (c)(11), (c)(12), (e)(3), and (f). Amendments in subsection (b)(6), (c)(7), and (d) change the words "prior to" to "before." Amendments also replace TDI's old mailing address with its new mailing address and provide TDI's website where referenced forms may be obtained in subsections (c)(11), (e)(3), and (f), and an amendment in subsection (f) provides the TDI mailing address where the referenced form may be obtained. Another amendment replaces the word "line" with "lines" and "prior to" with "before."

Section 5.9006. Amendments to §5.9006 clarify and improve the readability of signage requirements in paragraph (1) and replace the words "at which" with "where" in paragraph (3).

Section 5.9007. Amendments to §5.9007 update references to forms in subsections (a)(1) and (b)(1). Amendments also update the applicable program area name and replace TDI's old mailing address with its new mailing address in subsections (a)(1) and (b)(1), and amendments in subsections (a)(1) and (b)(1) provide TDI's website where the referenced forms may be obtained. Plain language changes make minor nonsubstantive wording, punctuation, and grammar changes throughout the section for clarity.

Section 5.9008. An amendment to the introductory sentence of §5.9008 updates a citation to the Occupations Code. Additional amendments change the words "prior to" to "before" in paragraph (1) and revise a reference to a form in paragraph (2).

Section 5.9009. Amendments to §5.9009 make minor nonsubstantive wording, punctuation, and grammar changes throughout the section for clarity and update a citation to the Occupations Code.

Section 5.9010. Amendments to §5.9010 replace the words "at which" with "where" in subsection (a) and revise references to forms in subsections (a) and (b).

Section 5.9011. An amendment to §5.9011 removes the unnecessary designation of the acronym "ASTM." "ASTM" is a defined term applicable throughout the subchapter, so it is not necessary to establish it as an acronym in the section.

Section 5.9012. Amendments to §5.9012 remove or replace the word "such" in subsections (a) and (d) and remove the phrase "set forth" in subsection (d). Citations to the Occupations Code in subsections (e) and (f) are also revised. Amendments also make minor nonsubstantive wording and punctuation changes throughout the section for clarity.

Section 5.9013. Amendments to §5.9013 update a statutory reference to use the defined term "the Act," add the word "with," change "his/her agent's" to "the state attorney general's agents," and insert a comma.

Section 5.9014. Amendments to §5.9014(a) change "he/she" to "the owner/operator," insert the word "it," and add the words "of this title" to a reference to an Administrative Code section. An amendment to subsection (b) revises text for better consistency with statutory language concerning compliance with the rules and statutes. Amendments in subsections (b) and (c) update citations to the Occupations Code.

FISCAL NOTE AND LOCAL EMPLOYMENT IMPACT STATEMENT. Jacob Martinez, manager in the Inspections Office, Property and Casualty 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 statute. Mr. Martinez 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.

Mr. Martinez 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, Mr. Martinez expects that administering the proposed amendments will have the public benefits of ensuring that TDI's rules conform to Occupations Code §2151.002 as amended by HB 1553.

Mr. Martinez expects that the proposed amendments will not increase the cost of compliance with Occupations Code §2151.002 because they do not impose requirements beyond those in the statute. The amendments merely update a definition for consistency with a statutory amendment and make additional nonsubstantive updates. As a result, any cost associated with the proposal results from the enforcement or administration of Occupations Code §2151.002.

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 because the amendments merely update a definition for consistency with a statutory change and make additional nonsubstantive revisions. 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. 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 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 not 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.

STATUTORY AUTHORITY. TDI proposes amendments to §§5.9001 - 5.9004 and 5.9006 - 5.9014 under Occupations Code §§2151.051, 2151.1021, and 2151.105 and Insurance Code §36.001.

Occupations Code §2151.051 provides that the commissioner administer and enforce Occupations Code Chapter 2151, which addresses the regulation of amusement rides.

Occupations Code §2151.1021 provides that the commissioner adopt rules requiring operators of mobile amusement rides to perform inspections of mobile amusement rides, including rules requiring daily inspections of safety restraints.

Occupations Code §2151.105 provides that the commissioner adopt rules requiring that a sign be posted to inform the public how to report an amusement ride that appears to be unsafe or to report an amusement ride operator who appears to be violating the law. The rules must require the sign to be posted at the principal entrance to the site at which an amusement ride is located or at any location on that site at which tickets for an amusement ride are available.

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 §§5.9001 - 5.9004 and 5.9006 - 5.9014 implement Occupations Code §§2151.002, 2151.051, 2151.1021, 2151.105, and 2151.152.

§5.9001.Purpose and Scope.

It is the purpose of this subchapter to aid in implementing the Amusement Ride Safety Inspection and Insurance Act (Occupations Code, Chapter 2151, concerning Regulation of Amusement Rides) [~~(hereinafter referred to as the Act)~~]. The provisions of this subchapter are in addition to, and not in lieu of, the provisions of Occupations Code Chapter 2151 [~~the Act (Title 13, Occupations Code, Chapter 2151)~~]. This subchapter applies to:

(1) any amusement ride as defined in Occupations Code [~~the Act,~~] §2151.002, concerning Definitions;

(2) the owner and operator of any amusement ride;

(3) any agent or representative of the owner or operator of any amusement ride;

(4) any insurer, including any surplus lines insurer, as defined in [~~the~~] Insurance Code Chapter 981, concerning Surplus Lines Insurance, and any other nonadmitted company;

(5) any agent or representative of any insurer, including surplus lines agents, as defined in [~~the~~] Insurance Code Chapter 981 and agents of any nonadmitted company;

(6) any independently procured policy subject to [~~the~~ ] Insurance Code Chapter 101, concerning Unauthorized Insurance, §101.001 et seq., providing bodily injury liability insurance for amusement rides; and

(7) any inspector working as an independent contractor or as an employee of an insurance carrier performing amusement ride inspections on behalf of[,] or under contract with[,] an insurance carrier.

§5.9002.Definitions.

The following words and terms, when used in this subchapter, [~~shall~~] have the following meanings.

(1) Act--The Amusement Ride Safety Inspection and Insurance Act, (Occupations Code Chapter 2151, concerning Regulation of Amusement Rides) [~~(Title 13, Occupations Code, Chapter 2151)~~].

(2) Amusement ride--As defined in Occupations Code §2151.002, concerning Definitions. [Any mechanical, gravity, or water device or devices that carry or convey passengers along, around, or over a fixed or restricted route or course or within a defined area for the purpose of giving its passengers amusement, pleasure, or excitement, but such term does not include:]

[(A) any coin-operated ride that is manually, mechanically, or electrically operated and customarily placed in a public location and that does not normally require the supervision or services of an operator;]

[(B) nonmechanized playground equipment, including, but not limited to, swings, seesaws, stationary spring-mounted animal features, rider-propelled merry-go-rounds, climbers, playground slides, trampolines, and physical fitness devices; or]

[(C) a challenge course or any part of a challenge course, as defined in §2151.107 of the Act to mean a challenge, ropes, team building, or obstacle course that is constructed and used for educational, team and confidence building, or physical fitness purposes, if the person who operates the challenge course has an insurance policy currently in effect written by an insurance company authorized to do business in this state or by a surplus lines insurer, as defined by Chapter 981, Insurance Code, or has an independently procured policy subject to Chapter 101, Insurance Code, insuring the operator against liability for injury to persons arising out of the use of the challenge course, in an amount not less than:]

~~[(i) for facilities with a fixed location:]~~

~~[(I) $100,000 bodily injury and $50,000 property damage per occurrence, with a $300,000 annual aggregate; or]~~

~~[(II) $150,000 per occurrence combined single limit, with a $300,000 annual aggregate; and]~~

~~[(ii) for facilities other than those with a fixed location:]~~

~~[(I) $1,000,000 bodily injury and $500,000 property damage per occurrence; or]~~

~~[(II) $1,500,000 per occurrence combined single limit.]~~

(3) ASTM--The American Society for Testing and Materials.

(4) Class A amusement ride--As defined in Occupations Code §2151.002. [~~An amusement ride with a fixed location and designed primarily for use by children 12 years of age or younger.~~]

(5) Class B amusement ride--As defined in Occupations Code §2151.002. [~~Any amusement ride not defined as a Class A amusement ride.~~]

(6) Class B motorized train amusement ride--A Class B amusement ride that:

(A) consists of a motorized vehicle that tows one or more separate passenger cars in a manner similar to a train but without regard to whether the vehicle and cars operate on a fixed track or course;

(B) does not travel under its own power in excess of 5 [~~five~~] miles per hour;

(D) does not run on an elevated track;

(E) has passenger seating areas enclosed by guardrails or doors; and

(F) does not have passenger cars that rotate independently from the motorized vehicle.

(7) Commissioner--The commissioner of insurance [~~Commissioner of Insurance~~].

(8) Inspector--A person qualified by training, education, or experience to conduct safety inspections of amusement rides or devices on behalf of an insurance company and in accordance with the ASTM [~~American Society for Testing and Materials (ASTM)~~], the manufacturer's standards and criteria, or standards established by the insurance company.

(9) Inspection--A procedure to be conducted by an inspector to determine whether an amusement ride or device is being assembled, maintained, tested, operated, and inspected in accordance with the current ASTM standards, the manufacturer's, or insurer's standards, whichever is the most stringent, and that determines the current operational safety of the ride or device.

(10) Interlocal agreement--An interlocal contract as defined in Government Code §791.003(2), concerning Definitions.

(11) Local government--A county, municipality, or special district; a junior college district, or other political subdivision of this state or another state; a local government corporation created under Transportation Code, Chapter 431, Subchapter D, concerning Local Government Corporations [~~Chapter 431~~]; a political subdivision corporation created under Local Government Code Chapter 304, concerning Energy Aggregation Measures for Local Governments; a local workforce development board created under Government Code §2308.253, concerning Creation of Local Workforce Development Boards; or a combination of two or more of such entities.

(12) Mobile amusement ride--As defined in Occupations Code §2151.002. [~~An amusement ride that is designed or adapted to be moved from one location to another and is not fixed at a single location.~~]

(13) Owner/operator--The person or entity responsible for an amusement ride and that person or entity's [~~his or its~~] agents or representatives. A separate reference to owner or operator is [~~shall be~~] deemed to include owner/operator.

(14) TDI--The Texas Department of Insurance.

§5.9003.Administration and Enforcement.

TDI [~~The Texas Department of Insurance~~] is required by the Act to administer and enforce the Act. Owners/operators operating amusement rides must pay a fee of $40 per year for each amusement ride subject to the Act. The fees must be paid by check or money order made payable to TDI [~~the Texas Department of Insurance~~]; or, if paying online [~~over the Internet~~], the fee must be submitted through the following website: https://feepay.txapps.texas.gov/tdi/amusement-ride-sticker-payments [~~Texas OnLine Project, as directed by the Texas OnLine Authority~~], which may add a surcharge for the [~~online~~] transaction. Except for overpayments resulting from mistakes of law or fact, all fees are nonrefundable and nontransferable.

§5.9004.Amusement Ride Operation Requirements.

(a) Operational Requirements. An owner/operator may not operate an amusement ride unless the owner/operator has satisfied and is continuing to satisfy the requirements in subsections (a) - (f) of this section.

(b) Insurance. The owner/operator must file with TDI [~~the Texas Department of Insurance (TDI)~~] the insurance policy or a photocopy of the insurance policy certifying that the policy is a true copy of the insurance policy provided to the insured as required by Occupations Code [~~the Act,~~] Chapter 2151, concerning Regulation of Amusement Rides.

(1) Occupations Code [~~The Act,~~] §2151.101, concerning Requirements for Operation, requires that any person who operates an amusement ride must have currently in force a combined single limit or split limit insurance policy written by an insurance company authorized to do business in this state or by a surplus lines insurer, as defined by [~~the~~] Insurance Code[,] Chapter 981, concerning Surplus Lines Insurance, or have an independently procured policy subject to [~~the~~] Insurance Code[,] Chapter 101, concerning Unauthorized Insurance, insuring the owner or operator against liability for injury to persons arising out of use of the amusement ride in an amount of not less than:

(A) for Class A amusement rides:

(i) $100,000 bodily injury and $50,000 property damage per occurrence with a $300,000 annual aggregate; or

(ii) $150,000 per occurrence combined single limit with a $300,000 annual aggregate;

(B) for Class B amusement rides, except for Class B motorized train amusement rides:

(i) $1,000,000 bodily injury and $500,000 property damage per occurrence; or

(ii) $1,500,000 per occurrence combined single limit.

(2) Occupations Code [~~The Act,~~] §2151.1011, concerning Liability Insurance for Certain Amusement Rides, requires that any person who operates a Class B motorized train amusement ride must have an insurance policy currently in effect written by an insurance company authorized to conduct business in this state or by a surplus lines [~~line~~] insurer, as defined by Insurance Code Chapter 981, or have an independently procured policy subject to Insurance Code Chapter 101, insuring the owner or operator against liability for injury to persons arising out of the use of the amusement ride in an amount of not less than $1 million in aggregate for all liability claims occurring in a policy year.

(3) A local government may satisfy the insurance requirements prescribed by paragraphs (1) and (2) of this subsection by obtaining liability coverage through an interlocal agreement.

(4) The policy or certified photocopy of the policy must be complete, including all applicable coverage forms and endorsements. Certificates of insurance will not be acceptable for this purpose.

(5) The policy must contain a schedule listing by name and serial number if applicable to [of] each amusement ride insured by the policy. In the event of additions or deletions of amusement rides during the policy term, such changes must [~~shall~~] be shown on a change endorsement, a copy of which must be submitted to TDI. Additions will also require an inspection certificate (TDI Form AR-100[,] (Amusement Ride Certificate of Inspection/Reinspection) [~~Inspection/Re-Inspection~~ ], revised effective February 2022 [~~Revised Effective October, 2005~~]) and a $40 fee for each amusement ride to be submitted to TDI before [~~prior to~~] any operation of the added amusement ride. Additions or deletions must [~~shall~~] be filed not [no] later than 10 days after the change.

(6) In the event of policy cancellation by either the insured owner/operator or the insurance company, the company must [~~shall~~] furnish notice of [~~such~~] cancellation to TDI as soon as possible, but not later than 10 days before the [~~prior to~~] cancellation.

(7) The owner/operator will provide to any sponsor, lessor, landowner, or other person responsible for an amusement ride offered for use by the public[,] a photocopy of the inspection certificate and the insurance policy required by this section.

(8) If the owner/operator obtains an additional amusement ride device, the ride must [~~shall~~] be added to the insurance policy and a copy of the endorsement submitted to TDI along with the required inspection certificate (TDI Form AR-100[~~, Amusement Ride Certificate of Inspection/Re-Inspection, Revised Effective October, 2005~~]) and the $40 fee before [~~prior to~~] operation in Texas.

(c) Inspection/Reinspection Certificate. The owner/operator must also file the original amusement ride inspection certificate (TDI Form AR-100) [~~(TDI Form AR-100, Amusement Ride Certificate of Inspection/Re-Inspection, Revised Effective October, 2005)~~] certifying with respect to each amusement ride the matters required by the Act. A separate inspection certificate is required for each amusement ride that shows the ride's [~~showing the~~] name, serial number, and manufacturer [~~of the ride~~], as well as the inspector's name, the owner/operator, a picture of the ride in an operable state taken at the time of the inspection, and other information as requested. The serial number, name, and description [~~and name/description~~] of the amusement ride must [~~shall~~] coincide with the same information identified on the insurance policy. If major components of the ride (for example, the crane used in a bungee operation) [~~, i.e., the crane used in a bungee operation,~~] are interchangeable, then the name, serial number, and manufacturer of the inspected component must [~~shall~~] be included on the inspection certificate. The inspection certificate is valid for a period of one year, and for expedience in processing, it should, if possible, coincide with the effective date of the insurance policy. The inspection must [~~shall~~] be conducted by the insurer or a person with whom the insurer has contracted. The inspector must [~~shall~~] provide both the insurer and owner/operator with a written certificate that the inspection has been made and that the amusement ride meets the standards for coverage.

(1) The inspection certificate may [~~shall~~] not be submitted to TDI until all discrepancies have been resolved and all necessary repair(s) or replacement(s) required for the amusement ride to meet the standards for coverage have been made.

(2) The inspection required by Occupations Code §2151.101(a) [~~of the Act~~] must include a method to test the stress- and wear-related damage of critical parts of a ride that the manufacturer of the amusement ride determines are reasonably subject to failure as the result of stress and wear and could cause injury to a member of the [~~general~~] public as a result of a failure. The inspection must [~~shall~~] include a review of the owner/operator's daily inspection records and inspection and maintenance program in accordance with ASTM practice or the manufacturer's guidelines/inspection criteria. The inspection must [~~shall~~] be conducted with the amusement ride or device in an operable state and include an evaluation of the device for a minimum of one complete operating cycle.

(3) If the amusement ride or device consists of interchangeable major components, such as cranes used in bungee jumping operations, the crane or major component used during the inspection is [~~shall be~~] considered an integral part of the amusement ride and the inspection certificate must [~~shall~~] include the manufacturer and serial number of the crane or major component inspected with the amusement ride. If the inspected crane or major component is replaced by another unit, a new inspection is required to include the new identification and serial number of the replacement unit.

(4) Any bungee jumping amusement device must [~~shall~~] include a safety net or air bag as an integral part of the ride. The safety net or air bag must [~~shall~~] be of sufficient size to cover the jump zone. The safety net or air bag must [~~shall~~] be rated for the maximum free-fall [~~free fall~~] height possible from the jump platform used. If the jump area is over water, the water must be of sufficient depth to provide an adequate safety cushion. The safety net or air bag must [~~shall~~] be inspected as an integral part of the amusement ride.

(5) The inspection certificate must [~~shall~~ ] be signed by a representative of the insurer.

(6) If the amusement ride or device does not meet the inspection standards, the amusement ride may [~~shall~~] not be operated until all necessary repair(s) and/or replacement(s) have been made and the ride reinspected and an inspection/reinspection [~~inspection/re-inspection~~] certificate issued.

(7) It is [~~shall be~~] the responsibility of the amusement ride owner/operator to complete the following before [~~prior to~~] any operation of the ride:

(A) to request the insurer to certify that the insurance policy and the inspection certificate are true copies by an official of the insurer;

(B) to receive the completed policy and inspection certificate from the insurer if they elect to provide coverage; and

(C) to submit a certified copy of the insurance policy, the original inspection certificate, and the fee to TDI for review. A planning factor of 10 days should be allowed for TDI review and approval before [~~prior to~~] any operation of the ride. Errors of omission or commission on either the policy or inspection certificate may delay TDI approval.

(8) Immediately after any injury or death involving equipment failure, structural failure, or operator error, the amusement ride/device must [~~shall~~] be closed for public use until a new inspection is performed and an inspection/reinspection [~~inspection/re-inspection~~] certificate is submitted to TDI.

(9) In addition to the requirements of paragraphs (7) and (8) of this subsection, a mobile amusement ride on which a death occurs may not be operated until the requirements of Occupations Code §2151.1526, concerning Prohibition of Mobile Amusement Ride Operation, [~~of the Act~~] are met.

(10) In addition to the requirements of this subsection, an amusement ride whose operation has been prohibited by a municipal, county, or state law enforcement official under Occupations Code [~~pursuant to~~] §2151.152, concerning Other Enforcement Actions, or §2151.1525, concerning Prohibition of Amusement Ride Operation, [~~of the Act~~] may not be operated until the requirements of that section are met. Any on-site corrections that are made under [~~pursuant to~~] the requirements of Occupations Code §2151.1525 [~~of the Act~~] must be presented to the appropriate municipal, county, or state law enforcement official.

(11) TDI Form AR-100[,] (Amusement Ride Certificate of Inspection/Reinspection), revised effective February 2022 [~~Amusement Ride Certificate of Inspection/Re-Inspection, Revised Effective October, 2005~~], is adopted by reference and must [~~shall~~] be used for each filing of an amusement ride inspection certificate required by this section. This form [~~(the Amusement Ride Certificate of Inspection/Re-Inspection)~~] is published by TDI [~~the Texas Department of Insurance~~] and copies of the form may be obtained from the Inspections Office, MC: PC-INSP, [~~Loss Control Regulation Division, Mail Code 103-9A,~~] Texas Department of Insurance, P.O. Box 12030, [~~149104,~~] Austin, Texas 78711-2030, or on TDI's website at www.tdi.texas.gov/forms/formlisting.html. [~~78714-9104.~~]

(12) The inspection/reinspection [~~inspection/re-inspection~~ ] certificate, insurance policy, and fee must [~~shall~~ ] be submitted to the Inspections Office [~~TDI, Loss Control Regulation Division,~~] for review. If the inspection/reinspection [~~inspection/re-inspection~~] certificate and insurance policy meet the requirements of this subchapter, the [~~inspection/re-inspection~~ ] certificate will be date-stamped and forwarded to the owner/operator with TDI Form AR-101 (Texas Amusement Ride Compliance Sticker), effective [~~Effective~~] May[,] 2000, and adopted [~~herein~~] by reference. TDI Form AR-101 will indicate the expiration date of the inspection certificate and must [~~shall~~ ] be affixed to a major component of the amusement ride in a location visible to the ride participants.

(13) The records of the inspections required by this section will [~~shall~~] be made available for inspection by any municipal, county, or state law enforcement official at the location where [~~at which~~] the amusement ride is operated.

(d) Insurance Policy and Inspection Certificate Renewal. Renewal of the policy or inspection certificate must [~~shall~~ ] be completed with sufficient lead time to provide these documents to TDI with a minimum of 10 working days to review and approve the documents before [~~prior to~~] the expiration of either the policy or the inspection certificate.

(1) In the event of policy cancellation or expiration, the policy must [~~shall~~] promptly be replaced or renewed without any lapse in coverage while the amusement ride is offered for use by the public. Any operation without a valid and current insurance policy and current inspection certificate constitutes an illegal operation and is subject to the enforcement provisions and penalties under [~~pursuant to~~] Occupations Code §§2151.151, concerning Injunction; 2151.152; [,] 2151.1525; [,] 2151.1526; [,] and 2151.153, concerning Criminal Penalties [~~of the Act~~]. The sponsor, lessor, landowner, or other person responsible for an amusement ride offered for use by the public must [~~shall~~] be notified by the owner/operator of the coverage discontinuance.

(2) A renewal certificate of insurance will be acceptable for the purpose of this subsection, if the renewal certificate shows:

(A) insurance coverage insuring the owner or operator against liability arising out of the use of the amusement ride/device in an amount of not less than:

(i) for Class A amusement rides:

(I) $100,000 bodily injury and $50,000 property damage per occurrence with a $300,000 annual aggregate; or

(II) $150,000 per occurrence combined single limit with a $300,000 annual aggregate;

(ii) for Class B amusement rides, except for Class B motorized train amusement rides:

(I) $1,000,000 bodily injury and $500,000 property damage per occurrence; or

(II) $1,500,000 per occurrence combined single limit;

(iii) for Class B motorized train amusement rides, $1,000,000 in aggregate for all liability claims occurring in a policy year; and

(B) a policy term that includes the period of time during which the amusement ride will be offered for public use.

(e) Daily Inspections. In addition to the inspection required under this section, the owner/operator who operates a mobile amusement ride must perform and record daily inspections of the mobile amusement ride including safety restraints on each mobile amusement ride.

(1) Records of the daily inspections must be available for inspection by any municipal, county, or state law enforcement official at the location where [~~at which~~] the amusement ride is operated, and the records must be maintained with the amusement ride for a period of one year.

(2) The daily inspection record must include an inspection of the following:

(A) safety belts, bars, locks, and other passenger restraints;

(B) all automatic and manual safety devices;

(D) safety pins and keys;

(E) fencing, guards, barricades, stairways, and ramps;

(F) ride structure and moving parts;

(G) tightness of bolts and nuts;

(H) blocking, support braces, and jackstands;

(I) electrical equipment;

(J) lubrication as per manufacturer's instructions;

(K) hydraulic and/or pneumatic equipment;

(L) communication equipment necessary for operation (if applicable);

(M) operation of ride prior to opening through one complete cycle of proper functioning; and

(N) any other component that is included in the manufacturer's specific ride maintenance and safety checks or current ASTM standards, or that the operator or person performing the daily inspection deems necessary for inspection.

(3) TDI [~~The Texas Department of Insurance (TDI)~~] adopts and incorporates [~~herein~~] by reference TDI Form AR-300 (Texas Amusement Ride Safety Inspection and Insurance Act Daily Inspection Record), revised effective May 2022 [~~Effective May, 2000~~]. This form is published by TDI, and copies of the form may be obtained from the Inspections Office, MC: PC-INSP, [~~Loss Control Regulation Division, Mail Code 103-9A,~~] Texas Department of Insurance, P.O. Box 12030 [~~149104~~], Austin, Texas 78711-2030, or on TDI's website at www.tdi.texas.gov/forms/formlisting.html. [~~78714-9104.~~] This form sets forth the inspection requirements of this subsection and also includes the name of the device, location (city, state), date of the inspection, manufacturer and serial number, and owner/operator. The form must be signed by the person performing the daily inspection and the inspector's [~~his~~] supervisor.

(4) Daily inspection record forms used by industry associations, individual operators, or individual manufacturers may be used to fulfill the requirements of this subsection if the forms contain all of the inspection items and elements set forth in this subsection and the TDI Form AR-300 [~~(Daily Inspection Record)~~].

(5) In addition to the requirements of this subsection, the owner/operator who operates a mobile amusement ride must also follow the manufacturer's specific checklist for specific ride maintenance and safety checks.

(f) Schedule of Operations. In addition to the inspection requirements of this section, TDI Form AR-102 (Amusement Ride Schedule of Operations in Texas), revised effective May 2022, which [~~, Amusement Ride Schedule of Operations in Texas, Effective May, 2000,~~] is adopted [~~herein~~] by reference, must be used to provide [~~and shall include~~] a schedule of operating locations and dates for each six-month period for mobile operations. This form is published by TDI, and copies of the form may be obtained from the Inspections Office, MC: PC-INSP, Texas Department of Insurance, P.O. Box 12030, Austin, Texas 78711-2030, or on TDI's website at www.tdi.texas.gov/forms/formlisting.html. This information must [~~shall~~] be provided by the owner/operator to the Inspections Office, MC: PC-INSP [~~TDI, Loss Control Regulation Division, Mail Code 103-9A~~], Texas Department of Insurance, P.O. Box 12030 [~~149104~~], Austin, Texas 78711-2030 [~~78714-9104~~], a minimum of 10 days before [~~in advance of~~] each six-month period. Any changes in the schedule must be submitted on an amended TDI Form AR-102 to TDI by the owner/operator within 10 days of the [~~such~~] change.

§5.9006.Public Information Sign.

An owner/operator who operates an amusement ride in this state must [~~shall~~] post a sign to inform the public how to report an amusement ride that appears to be unsafe or to report an amusement ride operator who appears to be violating the law.

(1) The sign must be at least 20 inches in width and 30 inches in length and must be in at least 50-point[~~, all capital~~] block letters, bold-faced red-on-white-background type and must be readable from a distance of 25 feet.

(2) The sign must be printed in both English and Spanish.

(3) The sign must be posted at the principal entrance(s) to the site at which an amusement ride is located or at any location on that site where [~~at which~~] tickets for an amusement ride are available.

(4) The sign must state the following:

Figure: 28 TAC §5.9006(4) (No change.)

§5.9007.Quarterly Reports.

(a) An owner/operator who operates an amusement ride (the operator) must [~~shall~~] maintain accurate records of each injury caused by the ride in any state in which the injury results in death or requires medical treatment. An injury is caused by the ride if the injury occurs on the ride or is in any way associated with the ride.

(1) TDI [~~The Texas Department of Insurance (TDI)~~] adopts and incorporates by reference TDI Form AR-800 (Quarterly Injury Report Amusement Ride Safety Inspection and Insurance Act), revised effective May 2022 [~~(Quarterly Injury Report) Revised Effective October, 2005~~]. This form is published by TDI, and copies of the form may be obtained from the Inspections Office, MC: PC-INSP [~~Loss Control Regulation Division, Mail Code 103-9A~~], Texas Department of Insurance, P.O. Box 12030 [~~149104~~], Austin, Texas 78711-2030, or on TDI's website at www.tdi.texas.gov/forms/formlisting.html. [~~78714-9104.~~] The operator must [~~shall~~] file an injury report on TDI Form AR-800 with TDI on a quarterly basis and must [~~shall~~] include in the report a description of each verifiable injury caused by a ride that results in death or an injury that requires medical treatment.

(2) For purposes of this section, the term "medical treatment" includes treatment (other than first aid) administered by a physician or by registered professional personnel under the standing orders of a physician.

(3) For purposes of this section, the term "medical treatment" does not include first-aid treatment (one-time treatment and subsequent observation of minor scratches, cuts, burns, splinters, and any other minor injuries that do not ordinarily require medical care) even though treatment is provided by a physician or by registered professional personnel.

(4) The quarterly injury report is not required of the operator for any quarter in which no reportable injury occurs in any state.

(b) An owner/operator who operates an amusement ride must [~~(the operator) shall~~] maintain accurate records of any governmental action taken in any state relating to that particular amusement ride, including an inspection resulting in the repair or replacement of equipment used in the operation of the amusement ride.

(1) TDI adopts and incorporates [~~herein~~] by reference TDI Form AR-801 (Quarterly Governmental Action Report Amusement Ride Safety Inspection and Insurance Act), revised effective May 2022. [~~(Quarterly Governmental Action Report) Effective May, 2000.~~] This form is published by TDI, and copies of the form may be obtained from the Inspections Office, MC: PC-INSP, [~~Loss Control Regulation Division, Mail Code 103-9A,~~] Texas Department of Insurance, P.O. Box 12030 [~~149104~~], Austin, Texas 78711-2030, or on TDI's website at www.tdi.texas.gov/forms/form13amusement.html. [~~78714-9104.~~] The owner/operator must [~~operator shall~~] file a governmental action report on TDI Form AR-801 with TDI on a quarterly basis and must [~~shall~~] include in the report a description of each governmental action taken in any state during the quarter covered by the report relating to that particular amusement ride, including an inspection resulting in the repair or replacement of equipment used in the operation of the amusement ride.

(2) For purposes of this section, the term "governmental action" includes an action in the exercise of police power or in the exercise of constitutional, legislative, administrative, or judicial powers conferred on federal, state, or local government, and that [~~which~~] results in any notification to the owner/operator relating to the amusement ride, including notifications of any perceived deficiencies regarding the safety of the amusement ride or the possibility of actual or imminent noncompliance [~~non-compliance~~ ] with applicable laws,[;] or any action taken in an administrative law forum or court of law, including private civil lawsuits.

(3) The quarterly governmental action report is not required of the owner/operator [~~operator~~] for any quarter in which no reportable governmental action was taken in any state.

(c) An owner/operator who operates an amusement ride [~~(the operator)~~] must [~~shall~~] maintain for not less than two years at the location where the ride is operated, for inspection by a municipal, county, or state law enforcement official, a photocopy of any quarterly report required under subsection (a) or (b) of this section to be filed with the commissioner.

§5.9008.Filing Affidavit.

In addition to the requirements of Occupations Code [~~the Act,~~] §2151.101(b), concerning Requirements for Operation, the following requirements apply.

(1) In the event a contract for use of an amusement ride provides that the amusement ride will not be operated until after July 1 but before [~~prior to~~] December 31 of any year, then timely filing of the insurance policy and inspection certificate must [~~shall~~] be made with [~~Texas Department of Insurance (~~]TDI[)] prior to the operation of the amusement ride. In no event may an amusement ride be operated before the inspection certificate, insurance policy, and fee are submitted to TDI as required by §5.9004 of this title (relating to Amusement Ride Operation Requirements).

(2) If the amusement ride is inspected more than once a year due to the requirements of this subchapter, a supplemental inspection certificate (TDI Form AR-100[,] (Amusement Ride Certificate of Inspection/Reinspection), revised effective February 2022 [~~Amusement Ride Certificate of Inspection/ Re-Inspection, Revised Effective October, 2005~~]) must be submitted to TDI not later than 15 days after each subsequent inspection. An additional annual $40 fee is not required for supplemental inspection certificates.

§5.9009.Information Request.

TDI [~~The Texas Department of Insurance (TDI)~~] may request[,] from the owner/operator, sponsor, lessor, landowner, or other person responsible for an amusement ride offered for use by the public[,] information concerning whether [~~or not~~] insurance in the amount required by [~~Title 13,~~] Occupations Code[,] Chapter 2151, concerning Regulation of Amusement Rides, or this subchapter is in effect for [on] the amusement ride. The owner/operator, sponsor, lessor, landowner, or other person to whom the information request is made must [~~shall~~] respond to TDI within 15 days after the request is made. The response must be by written verification. For the purpose of verification, the written response must [~~shall~~] include a copy of the declarations page of the policy insuring the amusement ride owner/operator [~~owner or operator~~].

§5.9010.Confirmation of Required Insurance and Inspection Certificate; Rule Construction.

(a) After the required insurance policy and inspection certificate, including certified check or money order for the total amount of annual fee have been received by TDI [~~the Texas Department of Insurance (TDI)~~] and found to be in compliance with the Act and this subchapter, the original amusement ride inspection certificate (TDI Form AR-100[,] (Amusement Ride Certificate of Inspection/Reinspection), revised effective February 2022, [~~Inspection/ Re-Inspection, Revised Effective October, 2005~~]) will be stamped "Texas Department of Insurance Amusement Ride Program," will include the date of approval, and will be returned to the insured owner or operator as evidence of compliance with filing requirements. The returned inspection certificate must be kept on the premises where [~~at which~~] the amusement ride is offered for public use and made available to any person granted authority under the Act to investigate compliance with the Act. A TDI Form AR-101[,] (Texas Amusement Ride Compliance Sticker), effective [~~Effective~~] May[,] 2000, will be returned with each inspection certificate. This weatherproof form must [~~shall~~] be affixed to the appropriate ride or device in a place easily visible to all ride participants.

(b) If the required insurance policy, inspection certificate, and/or annual fee is found not to be in compliance with the Act, this subchapter, or other applicable law, notice will be provided to the insured owner or operator or their insurer by TDI indicating the necessary action(s) for compliance. If noncompliance is due to mechanical problems or failure to meet insurance standards, another TDI Form AR-100 must [~~, Amusement Ride Certificate of Inspection/Re-Inspection, Revised Effective October, 2005 shall~~] be submitted to TDI for approval after the necessary corrective action(s) or repair(s) have been completed by the owner or operator. After the necessary actions have been completed by the owner/operator to the satisfaction of TDI, the TDI Form AR-100[~~, Revised Effective October, 2005~~] will be stamped and mailed to the insured owner or operator as described in subsection (a) of this section.

(c) Nothing in this subchapter may be construed to authorize the operation of an amusement ride until all applicable requirements of law are met.

§5.9011.Standards and Compliance.

An amusement ride covered by the Act that is sold, maintained, or operated in this state must [~~shall~~] comply with current standards established by the ASTM [~~American Society for Testing and Materials (ASTM)~~]. Those standards are minimum standards. To the extent that the standards of the ASTM [~~American Society for Testing and Materials~~] conflict with the requirements of the Act, the more stringent requirement or standard applies.

§5.9012.Denial of Entry to Amusement Rides; Prohibiting Operation of Amusement Rides.

(a) The owner/operator of an amusement ride or device must [~~shall~~] have the ability to view patrons so that no one is permitted on a [~~such~~] ride or device who appears to be in an intoxicated, drugged, or other condition of health that could be detrimental to the safety of the patron, [~~themselves,~~ ] other patrons, the operator, or spectators.

(b) The owner/operator must [~~shall~~] exercise reasonable control to prohibit the wearing of improper attire or lack of attire as deemed appropriate for the ride or device.

(c) The owner/operator must [~~will~~] prohibit the carrying of any article that [~~which~~] might be dropped or thrown from the ride or device.

(d) The restrictions [~~set forth~~] in this section and others that will preclude participation on an amusement ride or device must [~~shall~~] be posted in plain view at the entrance to the ride. No operator may waive these [~~such~~] restrictions.

(e) A municipal, county, or state law enforcement official may enter and inspect without notice any amusement ride or device at any time to ensure public safety, and the owner/operator of an amusement ride must comply with the requirements of Occupations Code §2151.152 [~~of the Act~~], concerning Other Enforcement Actions, including providing copies of the inspection certificate and insurance policy and cooperating in the prohibiting of the operation of the amusement ride, if applicable.

(f) A municipal, county, or state law enforcement official may immediately prohibit operation of an amusement or device ride as set forth in Occupations Code §§2151.152 [~~§2151.152~~ ]; 2151.1525, concerning Prohibition of Amusement Ride Operation; [~~,§2151.1525~~] or 2151.1526, concerning Prohibition of Mobile Amusement Ride Operation [~~§2151.1526 of the Act~~], and a person may not operate the amusement ride until the requirements of Occupations Code §§2151.152, 2151.1525, and 2151.1526 [~~of the Act~~] are met.

§5.9013.Injunctions.

Any person who operates an amusement ride, amusement attraction, or amusement device, and offers such for the public, must meet the requirements of the [~~Texas Amusement Ride Safety Inspection and Insurance~~] Act. Failure to comply with or violations of the Act constitute a Class B misdemeanor. Each day of public operation constitutes [~~shall constitute~~] a separate and distinct offense. The district attorney of each county in which an amusement ride or device is operated or, on request of the commissioner of insurance, the state attorney general, or one of the state attorney general's [~~his/her~~] agents, may seek an injunction against any person operating an amusement ride or device in violation of the Act or in violation of this subchapter.

§5.9014.Penalties; Enforcement.

(a) An amusement ride owner/operator commits an offense if the owner/operator [~~he/she~~] fails to comply with any requirement under §5.9004 of this title (relating to Amusement Ride Operation Requirements), §5.9006 of this title (relating to Public Information Sign), §5.9007 of this title (relating to Quarterly Reports), or §5.9008 of this title (relating to Filing Affidavit). An owner/operator, sponsor, lessor, landowner, or other person responsible for an amusement ride offered for use by the public commits an offense if the owner/operator [~~he/she~~ ] fails to provide information required by this subchapter or provides false information under §5.9004(a)(2)(G) of this title. Any offense under this subchapter is considered a Class B misdemeanor. Each time a violation of this subchapter is committed it constitutes a separate offense.

(b) In addition to action by the state attorney general, local municipal, county, or state law enforcement officials may be solicited to determine compliance with this subchapter or with Occupations Code Chapter 2151, Subchapter C, concerning Operation of Amusement Rides, other than Occupations Code §2151.104, concerning Access to Rides, [~~§§2151.101 - 2151.103 of the Act~~] in conjunction with TDI [~~Texas Department of Insurance~~], and may institute an action in a court of competent jurisdiction to enforce the Act [~~Title 13, Occupations Code, Chapter 2151,~~] and this subchapter.

(c) The prosecuting attorney in a case in which a person is convicted of an offense under Occupations Code §2151.153, concerning Criminal Penalties, must [~~of the Act shall~~] report the offense to TDI not later than the 90th day after the date of the conviction.

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 August 5, 2024.

TRD-202403583

Jessica Barta

General Counsel

Texas Department of Insurance

Earliest possible date of adoption: September 15, 2024

For further information, please call: (512) 676-6555

CHAPTER 21. TRADE PRACTICES

SUBCHAPTER TT. ALL-PAYOR CLAIMS DATABASE

28 TAC §§21.5401, 21.5403 - 21.5406

The Texas Department of Insurance (TDI) proposes amendments to 28 TAC §21.5401 and §§21.5403 - 21.5406, concerning the all-payor claims database. An amendment to §21.5401 implements House Bill 4611, 88th Legislature, 2023. Amendments to §21.5406 implement House Bill 3414, 88th Legislature, 2023. Other amendments to the sections implement HB 2090, 87th Legislature, 2021, which amended the Texas Insurance Code by adding Chapter 38, Subchapter I, concerning Texas All Payor Claims Database (APCD). TDI also proposes nonsubstantive amendments in each section.

EXPLANATION. The proposed amendments make changes in accordance with HB 3414, which made amendments to Insurance Code Chapter 38, including revisions to the definition of "payor" in Insurance Code §38.402, the membership of the stakeholder advisory group in §38.403, and permissible data collection in Insurance Code §38.404. A nonsubstantive change to §21.5401 is made to conform with HB 4611, which changed the location in the Government Code of statutes concerning Medicaid managed care programs. Other amendments are made in accordance with HB 2090. The proposed amendments include a new version of the Texas APCD Common Data Layout (CDL) to conform with changes to the national CDL and other changes to support the purpose and mission of the APCD.

The CDL is a technical and natural language description of the file format that payors are required to use to submit data to the APCD. The CDL details the data structure and organization necessary for successful file submissions. Clear technical instructions--including definitions of data fields, required headers, and descriptions--in the CDL are necessary to ensure the integrity and validity of the APCD data. Periodic updates to the technical instructions ensure the CDL's long-term usability and relevance by allowing clarifications that improve payor understanding of the CDL requirements and accommodating technological improvements or changes in claim standards.

In addition, the proposed amendments enhance clarity, streamline the sections, and make the text consistent with current agency drafting style and plain language preferences. These nonsubstantive changes include adding rule cross-references; deleting unnecessary statutory citations; and otherwise improving wording, such as by replacing "such" with "this" and "said" with "the." These amendments are not noted in the following descriptions of the amendments unless it is necessary or appropriate to provide additional context or explanation.

Descriptions of the sections' proposed amendments follow.

Section 21.5401. The amendments to §21.5401 revise subsection (b) to clarify that the listing of payors required to submit data files is not exclusive but includes any payor subject to Chapter 38. Self-insurance funds established under Government Code Chapter 2259, concerning Self-Insurance by Governmental Units, are added to the listing to clarify applicability to those payors, and subsequent paragraphs are renumbered to reflect this addition. In paragraph (19), the citation to the Government Code for Medicaid managed care plans is changed to Title 4, Subtitle I, instead of Chapter 533, because of a change in the citation to these programs in Insurance Code §38.402(7) made in Section 2.117 of HB 4611.

Section 21.5403. An amendment to §21.5403(a) updates the CDL version that a payor is required to follow to version 3.0.1. The Texas APCD CDL has been updated to align with the national CDL. It identifies the types of data a payor is required to report by listing the standardized data elements for each data file identified in §21.5404(c) and identifying whether the data element is required. For each data element, it also identifies data quality standards and provides technical guidance describing the information payors must submit, including the source of the information and coding standards.

Amendments to subsection (b) permit the Center for Health Care Data at the University of Texas Health Science Center at Houston (Center) to adopt future versions of the Texas APCD CDL, as long as no additional data elements are required beyond those required in version 3.0.1 and no data elements are required that fall outside the scope of Chapter 38, Subchapter I. This will streamline the Center's ability to update technical guidance and will reduce confusion by payors, clarifying that such guidance can be incorporated in the Texas APCD CDL, rather than in a separate document. It will also allow the Center to monitor changes taking place across the country to maximize uniformity with other states' APCDs, which is more cost-effective for the payors subject to reporting. Any addition of required data elements would occur only through TDI rulemaking. If the Center publishes an updated version of the Texas APCD CDL, it will communicate an implementation deadline and provide at least 90 days for payors to transition to the new version of the Texas APCD CDL.

Section 21.5404. An amendment to subsection (a)(1) updates the cross-reference to §21.5401 to conform with changes to numbering in that section. An amendment in subsection (b) clarifies that the requirement to register applies to payors or their designees that are subject to the subchapter where §21.5404 is located. An amendment removes paragraph (1) from subsection (d) to eliminate the option to use a USB drive because it is less efficient to administer, and no payors have chosen to use this option. Subsequent paragraphs are renumbered to reflect this change. The prohibition against using data with a unique coding system is eliminated from subsection (k) because it duplicates language in subsection (m).

Section 21.5405. The amendments to subsection (a) modify the due date of payor reporting, reducing the time to submit the data from 90 days post-adjudication to 30 days. This change will provide more timely data to researchers and will allow the APCD to better and more timely support infectious disease monitoring efforts in coordination with the Texas Epidemic Public Health Institute (TEPHI). The updated submission timeframe will also allow the APCD, at the aggregate-geographic-region level, to support other state agency epidemiological monitoring of acute health conditions or events like pandemics or natural disasters.

Current subsection (b) is deleted because its provisions relating to the original commencement of APCD reporting are no longer necessary. A new subsection (b) is added to clarify the circumstances in which payors must submit test data files.

Current subsections (c) and (e) are deleted, and their exception and extension provisions have been incorporated into current subsection (d), which is redesignated as subsection (c). The text of redesignated subsection (c) is also revised to allow payors to submit requests for exceptions and extensions 15 days in advance rather than 30 days, and to clarify that the deadline for data submissions is tolled while the Center considers a request for exception or extension. Redesignated subsection (c) authorizes payors to request temporary exceptions or extensions for up to 12 months if they demonstrate that compliance would impose an unreasonable cost or burden relative to the public value that would be gained from full compliance. To ensure APCD reporting is not a barrier to new payors entering the market, the subsection allows an extension for a payor's first required reporting if the payor registers with the Center and demonstrates it has fewer than 10,000 covered lives across all plans subject to reporting. This approach ensures that the Center can make reasonable accommodations to help payors comply with APCD reporting obligations. To assist with the oversight and enforcement required by Insurance Code §38.409(a)(3), redesignated subsection (c) is also amended to add an annual reporting requirement for the Center to share information with TDI about payor compliance, exceptions, and extensions.

Existing subsections (f) and (g) are redesignated as subsections (d) and (e).

A new subsection (f) is added. It states that payors must provide reasonable follow-up information requested by the Center, limited to ensuring that the payor submitted complete and correct information.

Existing subsections (h) and (i) are redesignated as subsections (g) and (h).

A new subsection (i) is added. It provides the starting date for the new data submission time frames found in subsection (a). Depending on the timing of the rule adoption, TDI may adjust the starting date of the new data submissions to provide payors at least 90 days from the date the rule amendments are adopted to transition to the new data submission dates.

Section 21.5406. New subsection (d) is added, establishing a one-year term of office for the new advisory member representing an institution of higher education, as required by HB 3414. New subsection (e) is added, limiting terms of office to no more than six consecutive years, except as provided by current subsection (d), which is redesignated as subsection (f). An amendment to redesignated subsection (f) changes the required designation of a replacement member to serve the remainder of a term to a permissive designation.

TDI received comments on an informal draft of this proposal posted on the department's website on April 16, 2024. TDI considered those comments when drafting this proposal. In response to those comments, two data elements that were included in the informal draft of the Texas APCD CDL (related to drug strength and therapeutic classification) are changed from required to optional fields.

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 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 statute. Ms. Bowden made this determination because, other than possibly the clarification of the applicability of the rule, 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. Regarding the applicability of the rule, the proposal clarifies that the definition of payor includes a self-insurance fund established under Government Code Chapter 2259. However, this is done to be consistent with the definition of payor in Insurance Code §38.402(7), which includes "a health benefit plan offered or administered by or on behalf of this state or a political subdivision of this state or an agency or instrumentality of the state or a political subdivision of this state. . . ." 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 them will have the public benefits of ensuring that TDI rules conform to Insurance Code Chapter 38, Subchapter I, and making them clearer and more consistent. Clarifying the applicability of the payors that must submit data to the APCD to be consistent with the definition of payor in Subchapter I may result in more data being submitted to the APCD, furthering the stated purpose in Insurance Code §38.401, concerning Purpose of Subchapter, of increasing public transparency of health care information. Updating the Texas APCD CDL to incorporate changes to the national CDL will provide administrative efficiency for payors subject to reporting. Updating the CDL to obtain more useful information and requiring that it be filed more quickly after adjudication is complete will further the second goal of Subchapter I of improving the quality of health care in this state by further enabling and improving health care research. Obtaining more recent claims data will allow the APCD to make timely contributions to the Texas Epidemic Public Health Institute, created in 2021 by the passage of SB 1780 (87R), which added Chapter 75, Subchapter D, to the Education Code.

Ms. Bowden notes that TDI posted an informal draft substantially similar to this proposal on the department's website on April 16, 2024. TDI particularly requested that carriers provide "estimates on the cost to implement these changes." No carrier indicated any cost of implementation. Even so, TDI anticipates that the proposed amendments may impose minor economic costs on persons required to comply with the amendments. The costs will vary based on each payor's data systems and staffing strategies. Costs may result from amendments to the CDL and amending the due date for submitting data to 30 days post-adjudication from 90 days, resulting in required changes to data submissions and programming.

Cost of personnel associated with programming information systems for data collection. The United States Department of Labor, Bureau of Labor Statistics State Occupational Employment and Wage Estimates for Texas, indicates that the hourly mean wage for computer programmers is $49.35 (www.bls.gov/oes/current/oes_tx.htm#15-0000). TDI recognizes that costs will vary depending on each payor's data systems and staffing strategies, but the proposed changes are minimal. Ms. Bowden estimates a one-time requirement of between eight and 24 hours to amend the existing programming. Ms. Bowden expects there will be no cost added by proposed amendments to §21.5406, which outlines appointment standards for the stakeholder advisory committee.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS.

TDI has determined that the proposed new sections will not have an adverse economic effect on rural communities, but they may have an adverse economic effect on small or micro businesses, to the extent that they are subject to reporting data to the APCD. The cost analysis in the Public Benefit and Cost Note section of this proposal also applies to these small and micro businesses. TDI estimates that between three and 15 payors that are small or micro businesses may be required to report data to the APCD. They will have to amend their reporting if the CDL is amended and submit data within 30 days of adjudication, rather than the current 90 days. The primary objective of this proposal is to continue to support an APCD that increases transparency of health care costs, utilization, and access across all payors in Texas and includes information useful for purposes of improving health care quality and outcomes, improving population health, and controlling health care costs. TDI considered the following options to minimize any adverse effect on small and micro businesses while accomplishing the proposal's objectives:

(1) exempting payors from reporting if they are small or micro businesses or based on a minimum threshold of covered lives;

(2) requiring payors that are small or micro businesses to report fewer data elements; and

(3) providing additional time to comply with the rules for payors that are small or micro businesses or based on a minimum threshold of covered lives.

In considering Option 1, TDI declined to provide an exemption for payors that are small or micro businesses because such an exemption is not supported by the statute. As stated in the cost note, the statute specifies a particular set of information that must be collected at a minimum. TDI does not have authority to exempt small or micro businesses from the collection of some of the data, and without the guidance provided by these rules, small or micro businesses would have a more difficult time complying with the requirements of the statute and might not provide usable data.

In regard to Option 2, TDI believes an incomplete dataset would provide little value to researchers and would not satisfy the purpose of the statute. However, the proposal does continue to authorize the Center to grant temporary exceptions for issuers that are unable to comply with certain reporting requirements. Such exceptions may be granted if compliance would impose an unreasonable cost relative to the public value that would be gained from full compliance.

After considering Option 3, TDI opted to continue to provide additional implementation time based on the number of lives covered by the payor in plans subject to reporting. This will mitigate the costs required to implement the rule by allowing eligible payors to spread those costs over a longer timeframe. This may further reduce costs by enabling payors to implement the requirements without hiring additional staff. This flexibility will be available to all payors with fewer than 10,000 covered lives in plans that are subject to reporting, including small and micro businesses. This is a metric that can be validated by TDI and ensures that high-value datasets are not delayed.

EXAMINATION OF COSTS UNDER GOVERNMENT CODE §2001.0045. TDI has determined that this proposal does impose a possible cost on regulated persons. However, no additional rule amendments are required under Government Code §2001.0045 because (1) the proposed new sections are necessary to implement legislation, and (2) the amendments are necessary to protect the health, safety, and welfare of the residents of this state. The proposed rules implement Insurance Code Chapter 38, Subchapter I, as added by HB 2090 and amended by HB 3414. The amendments to the CDL and the timing of data submissions support the mission of the APCD to improve the quality of health care in this state, such as by providing more timely data to the Texas Epidemic Public Health Institute.

The Legislature intended that changes would be made to APCD data collection over time in order to maximize the public health benefit. In Insurance Code §38.403, the Legislature required the creation of the stakeholder advisory group, in part to assist with "establishing and updating the standards, requirements, policies, and procedures relating to the collection and use of data. . . ." In §38.404, the Legislature tasked the Center with "determining the information a payor is required to submit" and required it to "establish" and "update" its data collection procedures. Section 38.409 requires TDI to adopt rules "in consultation with the center . . . specifying the types of data a payor is required to provide" and "specifying the schedule" in which a payor must provide the data. The Center has recommended the data-related changes in this rule proposal.

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 and limit an existing regulation;

- will increase the number of individuals subject to the rule's applicability by more closely following the statutory definition of payor; and

- will not positively or adversely affect the Texas economy.

STATUTORY AUTHORITY. TDI proposes amendments to §21.5401 and §§21.5403 - 5406 under Insurance Code §38.409 and §36.001.

Insurance Code §38.409 provides that the commissioner adopt rules specifying the types of data a payor is required to provide to the Center and also specifying the schedule, frequency, and manner in which a payor must provide data to the Center. It also requires the commissioner to adopt rules establishing oversight and enforcement mechanisms to ensure the submission of data.

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 21.5401 implements Insurance Code §38.402. Sections 21.5403 - 21.5405 implement Insurance Code §38.404 and §38.409. Section 21.5406 implements Insurance Code §38.403.

§21.5401.Applicability.

(a) This subchapter applies to a payor that issues, sponsors, or administers a plan subject to reporting under subsection (b) of this section.

(b) Payors must submit data files as required by this subchapter with respect to [~~each of the following types of~~] health benefit plans or dental benefit plans issued in Texas that are subject to Insurance Code Chapter 38, Subchapter I, concerning Texas All Payor Claims Database, including:

(1) a health benefit plan as defined by Insurance Code §1501.002, concerning Definitions;

(2) an individual health care plan that is subject to Insurance Code §1271.004, concerning Individual Health Care Plan;

(3) an individual health insurance policy providing major medical expense coverage that is subject to Insurance Code Chapter 1201, concerning Accident and Health Insurance;

(4) a health benefit plan as defined by §21.2702 of this title (relating to Definitions);

(5) a student health plan that provides major medical coverage, consistent with the definition of student health insurance coverage in 45 CFR §147.145, concerning Student Health Insurance Coverage;

(6) short-term limited-duration insurance as defined by Insurance Code §1509.001, concerning Definition;

(7) individual or group dental insurance coverage that is subject to Insurance Code Chapter 1201 or Insurance Code Chapter 1251, concerning Group and Blanket Health Insurance;

(8) dental coverage provided through a single service HMO that is subject to Chapter 11, Subchapter W, of this title (relating to Single Service HMOs);

(9) a Medicare supplement benefit plan under Insurance Code Chapter 1652, concerning Medicare Supplement Benefit Plans, if the payor elects to submit such data;

(10) a health benefit plan as defined by Insurance Code Chapter 846, concerning Multiple Employer Welfare Arrangements;

(11) basic coverage under Insurance Code Chapter 1551, concerning Texas Employees Group Benefits Act;

(12) a basic plan under Insurance Code Chapter 1575, concerning Texas Public School Employees Group Benefits Program;

(13) a health coverage plan under Insurance Code Chapter 1579, concerning Texas School Employees Uniform Group Health Coverage;

(14) basic coverage under Insurance Code Chapter 1601, concerning Uniform Insurance Benefits Act for Employees of the University of Texas System and the Texas A&M University System;

(15) a county employee health benefit plan established under Local Government Code Chapter 157, concerning Assistance, Benefits, and Working Conditions of County Officers and Employees;

(16) group dental, health and accident, or medical expense coverage provided by a risk pool created under Local Government Code Chapter 172, concerning Texas Political Subdivisions Uniform Group Benefits Program;

(17) coverage for medical expenses provided under a self-insurance fund established under Government Code Chapter 2259, concerning Self-Insurance by Governmental Units;

(18) [~~(17)~~] the state Medicaid program operated under Human Resources Code Chapter 32, concerning Medical Assistance Program;

(19) [~~(18)~~] a Medicaid managed care plan operated under Government Code Title 4, Subtitle I, concerning Health and Human Services [~~Chapter 533, concerning Medicaid Managed Care Program~~];

(20) [~~(19)~~] the child health plan program operated under Health and Safety Code Chapter 62, concerning Child Health Plan for Certain Low-Income Children;

(21) [~~(20)~~] the health benefits plan for children operated under Health and Safety Code Chapter 63, concerning Health Benefits Plan for Certain Children;

(22) [~~(21)~~] a Medicare Advantage Plan providing health benefits under Medicare Part C as defined in 42 USC §1395w-21, et seq., concerning Medicare+Choice Program;

(23) [~~(22)~~] a Medicare Part D voluntary prescription drug benefit plan providing benefits as defined in 42 USC §1395w-101, et seq., concerning Voluntary Prescription Drug Benefit Program; and

(24) [~~(23)~~] a health benefit plan or dental plan subject to the Employee Retirement Income Security Act of 1974 (29 USC §1001 et seq.) if the plan sponsor or administrator elects to submit this [~~such~~] data.

(c) Data files required by this subchapter must include information with respect to all Texas resident members, as defined in §21.5402(16) of this title (relating to Definitions). Information on persons who are not Texas resident members is not required.

§21.5403.Texas APCD Common Data Layoutand Submission Guide.

(a) Payors must submit complete and accurate data files for all applicable plans as required by this subchapter and consistent with the data elements and technical requirements found in the Texas APCD CDL v3.0.1 [~~v1.09, released May 20, 2022~~]. The Texas APCD CDL v3.0.1 is available on the Center's website. [~~and:~~]

~~[(1) is modeled on the "All-Payer Claims Database Common Data Layout" published by the National Association of Health Data Organizations and used with permission;]~~

[(2) identifies which data elements payors are required to submit in each data file and which data elements are optional, consistent with Insurance Code §38.404(c), concerning Establishment and Administration of Database; and]

~~[(3) identifies the record specifications, definitions, code tables, and threshold levels for each required data element.]~~

(b) If the Center adopts subsequent versions of the Texas APCD CDL, payors must submit data consistent with the requirements of each subsequent version, but this subchapter does not require the submission by payors of additional data elements that are not required in the Texas APCD CDL v3.0.1 or that do not fall within the scope of Insurance Code Chapter 38, Subchapter I, concerning Texas All Payor Claims Database. The Center will communicate to payors an implementation deadline for use of an updated version of the Texas APCD CDL that is not less than 90 days after the updated version has been published by the Center in its final form. [The Center may issue technical guidance that provides flexibility regarding the existing requirements contained in the Texas APCD CDL, such as removing required data elements, clarifying specifications, increasing the maximum length, or decreasing the minimum threshold. However, such guidance may not modify statutory requirements, impose more stringent requirements, or increase the scope of the data being collected.]

(c) The Center will establish, evaluate, and update data collection procedures within a submission guide, consistent with Insurance Code §38.404(f), concerning Establishment and Administration of Database. Notwithstanding subsection (b) of this section, in the event of an inconsistency between this subchapter and the submission guide, this subchapter controls.

§21.5404.Data Submission Requirements.

(a) Payors must submit the data files required by subsection (c) of this section to the Center according to the schedule provided in §21.5405 of this title (relating to Timing and Frequency of Data Submissions). Payors are responsible for submitting or arranging to submit all applicable data under this subchapter, including data with respect to benefits that are administered or adjudicated by another contracted or delegated entity, such as carved-out behavioral health benefits or pharmacy benefits administered by a pharmacy benefit manager. Payors may arrange for a third-party administrator or delegated or contracted entity to submit data on behalf of the payor[,] but may not submit data that duplicates data submitted by a third party.

(1) The Texas Health and Human Services Commission may submit data on behalf of all applicable payors participating in a plan or program identified in §21.5401(b)(18) - (b)(21) [~~§21.5401(b)(17) - (b)(20)~~] of this title (relating to Applicability).

(2) A payor that acts as an administrator on behalf of a health benefit plan or dental plan for which reporting is optional per Insurance Code §38.407, concerning Certain Entities Not Required to Submit Data, may ask the plan sponsor whether it elects or declines to participate in or submit data to the Center and may include data for such plans within the payor's data submission. Both the inquiry to and response from the plan sponsor should be in writing.

(3) A payor providing Medicare Supplement benefit plans may elect to submit Medicare Supplement benefit plan data to the Center.

(b) Payors or their designees that are subject to this subchapter must register with the Center each year [~~to submit data~~], consistent with the instructions and procedures contained in the submission guide. Payors must communicate any changes to registration information by contacting the Center within 30 days using the contact information provided in the submission guide. Upon registration, the Center will assign a unique payor code and submitter code to be used in naming the data files and provide the credentials and information required to submit data files.

(1) enrollment and eligibility data files;

(2) medical claims data files;

(3) pharmacy claims data files;

(4) dental claims data files; and

(5) provider files.

(d) Payors must package all files being submitted into zip files that are encrypted according to the standard provided in the submission guide. Payors must submit the encrypted zip files to the Center using one of the following file submission methods:

~~[(1) save the files on a Universal Serial Bus (USB) flash drive and use a secure courier to deliver the USB drive to the database according to delivery instructions provided in the submission guide;]~~

(1) [~~(2)~~] transmit the files to the Center's Managed File Transfer servers using the Secure File Transport Protocol (SFTP) and the credentials and transmittal information provided upon registration;

(2) [~~(3)~~] upload files from an internet browser using the Hypertext Transfer Protocol Secure (HTTPS) protocol and the credentials and transmittal information provided upon registration; or

(3) [~~(4)~~] transmit the files using a subsequent electronic method as provided in the data submission guide.

(e) Payors must name data files and zip files consistent with the file naming conventions specified by the Center in the submission guide.

(f) Payors must format all data files as standard 8-bit UCS Transformation Format (UTF-8) encoded text files with a ".txt" file extension and adhere to the following standards:

(1) use a single line per record and do not include carriage returns or line feed characters within the record;

(2) records must be delimited by the carriage return and line feed character combination;

(3) all data fields are variable field length, subject to the constraints identified in the Texas APCD CDL, and must be delimited using the pipe (|) character (ASCII=124), which must not appear in the data itself;

(4) text fields must not be demarcated or enclosed in single or double quotes;

(5) the first row of each data file must contain the names of data columns as specified by the Texas APCD CDL;

(6) numerical fields (e.g., ID numbers, account numbers, etc.) must not contain spaces, hyphens, or other punctuation marks, or be padded with leading or trailing zeroes;

(7) currency and unit fields must contain decimal points when appropriate;

(8) if a data field is not to be populated, a null value must be used, consisting of an empty set of consecutive pipe delimiters (||) with no content between them.

(g) Data files must include information consistent with the Texas APCD CDL that enables the data to be analyzed based on the market category, product category, coverage type, and other factors relevant for distinguishing types of plans.

(h) Payors must include data in medical, pharmacy, and dental claims data files for a given reporting period based on the date the claim is adjudicated, not the date of service associated with the claim. For example, a service provided in March[,] but adjudicated in April[,] would be included in the April data report. Likewise, any claim adjustments must be included in the appropriate data file based on the date the adjustment was made and include a reference that links the original claim to all subsequent actions associated with that claim. Payors must report medical, pharmacy, and dental claims data at the visit, service, or prescription level. Payors must also include claims for capitated services with all medical, pharmacy, and dental claims data file submissions.

(i) Payors must include all payment fields specified as required in the Texas APCD CDL. With respect to medical, pharmacy, and dental claims data file submissions, payors must also:

(1) include coinsurance and copayment data in two separate fields;

(2) clearly identify claims where multiple parties have financial responsibility by including a Coordination of Benefits, or COB, notation; and

(3) include specified types of denied claims and identify a denied claim either by a denied notation or assigning eligible, allowed, and payment amounts of zero. The data submission guide will specify the types of denied claims that must be included on the basis of the claim adjustment reason code associated with the denial. In general, denied claims are not required when the reason for the denial was incomplete claim coding or duplicative claims. Denied claims are required when they accurately reflect care that was delivered to an eligible member but not covered by a plan due to contractual terms, such as benefit maximums, place of service, provider type, or care deemed not medically necessary or experimental or investigational. Payors are not required to include data for rejected claims or claims that are denied because the patient was not an eligible member.

(j) Every data file submission must include a control report that specifies the count of records and, as applicable, the total allowed amount and total paid amount.

(k) Unless otherwise specified, payors must use the code sources listed and described in the Texas APCD CDL within the member eligibility and enrollment data file and medical, pharmacy, and dental claims data file and provider file submissions. [~~When standardized values for data fields are available and stated within the Texas APCD CDL, a payor may not submit data that uses a unique coding system.~~]

(l) Payors must use the member's social security number as a unique member identifier (ID) or assign an alternative unique member ID as provided in this subsection.

(1) If a payor collects the social security number for the subscriber only, the payor must assign a discrete two-digit suffix for each member under the subscriber's contract.

(2) If a payor does not collect the subscriber's social security number, the payor must assign a unique member ID to the subscriber and the member in its place. The payor must also use a discrete two-digit suffix with the unique member ID to associate members under the same contract with the subscriber.

(3) A payor must use the same unique member ID for the member's entire period of coverage under a particular plan. If a change in the unique member ID or the use of two different unique member IDs for the same individual is unavoidable, the payor must provide documentation, if available, linking the member IDs in the form and method provided by the Center.

(m) When standardized values for data variables are available and stated within the Texas APCD CDL, no specific or unique coding systems will be permitted as part of the health care claims data set submission.

(n) Within the enrollment and eligibility data files, payors must report member enrollment and eligibility information at the individual member level. If a member is covered as both a subscriber and a dependent on two different policies during the same month, the payor must submit two member enrollment and eligibility records. If a member has two different policies for two different coverage types, the payor must submit two member enrollment and eligibility records.

(o) Payors must include a header and trailer record in each data file submission according to the formats described in the Texas APCD CDL. The header record is the first record of each separate file submission, and the trailer record is the last.

§21.5405.Timing and Frequency of Data Submissions.

(a) Payors must submit monthly data files according to the following schedule:

(1) January data must be submitted no later than March [~~May~~] 7 of that year;

(2) February data must be submitted no later than April [~~June~~] 7 of that year;

(3) March data must be submitted no later than May [~~July~~] 7 of that year;

(4) April data must be submitted no later than June [~~August~~] 7 of that year;

(5) May data must be submitted no later than July [~~September~~] 7 of that year;

(6) June data must be submitted no later than August [~~October~~] 7 of that year;

(7) July data must be submitted no later than September [~~November~~] 7 of that year;

(8) August data must be submitted no later than October [~~December~~] 7 of that year;

(9) September data must be submitted no later than November 7 of that [~~January 7 of the following~~] year;

(10) October data must be submitted no later than December 7 of that [~~February 7 of the following~~] year;

(11) November data must be submitted no later than January [~~March~~] 7 of the following year; and

(12) December data must be submitted no later than February [~~April~~] 7 of the following year.[;]

(b) Payors must submit test data files as provided in the submission guide:

(1) after registering for the first time with the Center as a payor that is subject to reporting under this subchapter;

(2) after a merger, acquisition, divestiture, or other change of ownership that requires an update to a payor's registration; and

(3) before the effective date of a new version of the TX APCD CDL, consistent with §21.5403 of this title (relating to Texas APCD Common Data Layout and Submission Guide) that contains additional data elements.

[(b) Except as provided in subsections (c) and (d) of this section, payors must submit test data files, historical data files, and monthly data files according to the dates specified by the Center, subject to the following requirements:]

[(1) the Center will provide notice of the timeline for payors to submit registration and test data no later than 90 days before the data is due, and test data will be due no sooner than October 1, 2022;]

[(2) the Center will provide notice of the timeline for submitting historical data, which must include data for reporting periods spanning from January 1, 2019, to the most recent monthly reporting period, no later than 120 days before the data is due, and historical data will be due no sooner than January 1, 2023; and]

[(3) the Center will provide notice of the timeline for submitting monthly data no later than 180 days before the commencement of the monthly data submission, and the first monthly data submission date will be no sooner than March 1, 2023.]

[(c) A payor with fewer than 10,000 covered lives in plans that are subject to reporting under this subchapter as of December 31 of the previous year must begin reporting no later than 12 months after the dates otherwise required, as specified by the Center, consistent with subsection (a) of this section. The payor must register with the Center to document the payor's eligibility for this extension.]

(c) [~~(d)~~] A payor may request a temporary exception or extension of time from complying with one or more requirements of this subchapter or the Texas APCD CDL by submitting a request to the Center, as provided in the submission guide posted on https://go.uth.edu/DSG, no less than 15 [30] calendar days before the date the payor is otherwise required to comply with the requirement.

(1) The [~~Except as provided in paragraph (2) of this subsection, the~~] Center may grant an exception or extension for good cause for not more than 12 consecutive months, if the payor demonstrates that compliance would impose an unreasonable cost or burden relative to the public value that would be gained from full compliance. An exception may not be granted from any requirement contained in Insurance Code Chapter 38, Subchapter I, concerning Texas All Payor Claims Database.

~~[(1) An exception may not last more than 12 consecutive months.]~~

(2) A payor that registers with the Center and demonstrates that it has fewer than 10,000 covered lives in plans subject to this subchapter qualifies for an extension under this subsection for the payor's first required reporting. The Center may grant an extension for new payors for not more than 12 consecutive months.

~~[(2) An exception may not be granted from any requirement contained in Insurance Code Chapter 38, Subchapter I.]~~

(3) The Center may request additional information from a payor in order to make a determination on an exception or extension request. A request for additional information must be in writing and must be submitted to the payor within 14 calendar days from the date the payor's request is received. The deadline for data submission is tolled while the Center makes a determination on an exception or extension request.

(4) A request for an exception or extension that is neither accepted nor rejected by the Center within 14 calendar days from the date the payor's request is received will be deemed accepted. If the Center has requested additional information from a payor under paragraph (3) of this subsection, the 14-day timeline begins the day after the payor submits the [~~such~~] information. If a payor does not respond to or fails to provide the Center with additional information as requested, the payor's request for an exception or extension may be deemed withdrawn by the Center at the end of the 14-day period.

(5) In order to assist TDI's oversight and enforcement required by Insurance Code §38.409, the Center will provide TDI on or before July 1st of each year for the prior year:

(A) the names of payors that timely reported data;

(B) information about payors that did not report data and either requested an exception or extension that the Center did not grant or otherwise failed to demonstrate an exemption from reporting under this subchapter;

(C) information about payors that obtained exceptions and extensions, including the nature of the exceptions and amount of extensions granted;

(D) information about payors that failed to report timely without obtaining an exception or extension, including the filing due dates and the dates of actual filing; and

(E) information about payors that otherwise failed to materially comply with the requirements of Insurance Code Chapter 38, Subchapter I, or this subchapter.

[(e) A payor that is unable to meet the reporting schedule provided by this section may submit a request for an extension to the Center before the reporting due date. The Center may grant a request for good cause at its discretion.]

[(1) The Center may request additional information from a payor in order to make a determination on an extension request. A request for additional information must be in writing and must be submitted to the payor within 14 calendar days from the date the payor's request is received.]

[(2) A request for an extension that is neither accepted nor rejected by the Center within 14 calendar days from the date the payor's request is received will be deemed accepted. If the Center has requested additional information from a payor under paragraph (1) of this subsection, the 14-day timeline begins the day after the payor submits such information. If a payor does not respond to or fails to provide the Center with additional information as requested, the payor's request for an extension may be deemed withdrawn by the Center at the end of the 14-day period.]

(d) [~~(f)~~] The Center will assess each data submission to ensure the data files are complete, accurate, and correctly formatted.

(e) [~~(g)~~] The Center will communicate receipt of data within 14 calendar days, inform the payor of the data quality assessments, and specify any required data corrections and resubmissions.

(f) Payors must provide reasonable follow-up information requested by the Center, limited to ensuring that the payor submitted complete and correct information.

(g) [~~(h)~~] Upon receipt of a resubmission request, the payor must respond within 14 calendar days with either a revised and corrected data file or an extension request.

(h) [~~(i)~~] If a payor fails to submit required data or fails to correct submissions rejected due to errors or omissions, the Center will provide written notice to the payor. If the payor fails to provide the required information within 30 calendar days following receipt of the [~~said~~] written notice, the Center will notify the department of the failure to report. The department may pursue compliance with this subchapter via any appropriate corrective action, sanction, or penalty that is within the authority of the department.

(i) The reporting schedule under subsection (a) of this section applies to monthly data submissions due on or after March 7, 2025, containing data for months beginning January 1, 2025. Payors must submit data for November and December 2024 at the same time as January 2025 data.

§21.5406.Stakeholder Advisory Group Terms.

(a) Except as otherwise provided in [~~by subsections (b) and (c) of~~] this section, the term of office for seats on the [~~members of the~~] stakeholder advisory group, as specified by [~~designated under~~] Insurance Code §38.403 [ ~~§38.403(b)(2) - (4)~~], concerning Stakeholder Advisory Group, is [~~serve fixed terms of~~] three years.

(b) Initial terms of office for the members of the stakeholder advisory group will end December 31, 2024.

(c) Subsequent terms of office for the members [~~designations~~] of the stakeholder advisory group will begin January 1, 2025, and will be staggered as follows:

(1) the terms of office for the seats of the two members representing the business community [~~, as provided by Insurance Code §38.403(b)(4)(A),~~] and the two members representing consumers will [~~, as provided by Insurance Code §38.403(b)(4)(B), with terms to~~] expire December 31, 2026;

(2) the terms of office for the seats of the member designated by the Teacher Retirement System of Texas, the[;] two members representing hospitals, [~~as provided by Insurance Code §38.403(b)(4)(C);~~] and the two members representing health benefit plan issuers will [~~, as provided by Insurance Code §38.403(b)(4)(D), with terms to~~] expire December 31, 2027; and

(3) the terms of office for the seats of the member designated by the Employees Retirement System; the two members representing physicians[~~, as provided by Insurance Code §38.403(b)(4)(E)~~]; and the two members not professionally involved in the purchase, provision, administration, or review of health care services, supplies, or devices, or health benefit plans will [~~, as provided by Insurance Code §38.403(b)(4)(F), with terms to~~] expire December 31, 2028.

(d) The term of office for the seat of a member representing an institution of higher education is one year.

(e) Except as provided by subsection (f) of this section, members may not serve for more than six consecutive years.

(f) [~~(d)~~] If a member does not complete the member's three-year term, a replacement member may [~~must~~] be designated to complete the remainder of the term. [~~A member designated by the Center to serve a partial term of less than two years will not be prevented from serving for an additional two consecutive terms.~~]

~~[(e) Except as provided by subsection (d) of this section, members designated by the Center under Insurance Code §38.403(b)(4) may not serve more than two consecutive terms.]~~

(g) [~~(f)~~] Members and prospective members of the stakeholder advisory group are subject to the conflicts of interest and standards of conduct provisions in paragraphs (1) - (4) of this subsection.

(1) A prospective member of the stakeholder advisory group must disclose to the designating entity any conflict of interest before being designated to the group.

(2) A member of the stakeholder advisory group must immediately disclose to the Center and the member's designating entity any conflict of interest that arises or is discovered while serving on the group.

(3) A conflict of interest means a personal or financial interest that would lead a reasonable person to question the member's objectivity or impartiality. An example of a conflict of interest is employment by or financial interest in an organization with a financial interest in work before the stakeholder advisory group, such as evaluating data requests from qualified research entities under Insurance Code §38.404(e)(2), concerning Establishment and Administration of Database.

(4) A member of the stakeholder advisory group must comply with Government Code §572.051(a), concerning Standards of Conduct; State Agency Ethics Policy, to the same extent as a state officer or employee.

(h) [~~(g)~~] A member may be removed from the stakeholder advisory group for good cause by the member's designating entity.

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 August 2, 2024.

TRD-202403558

Jessica Barta

General Counsel

Texas Department of Insurance

Earliest possible date of adoption: September 15, 2024

For further information, please call: (512) 676-6555