(a) The department has authority to conduct examinations of HCCs under Insurance Code §848.153. The department will conduct examinations in conjunction with an application and as needed to oversee the HCC's activity. The scope of the examination may vary based on the scope of an applicant's or HCC's activities and may include desk review. Any examination may include the review of one or more of the following components:
  (1) financial condition;
  (2) quality of health care services;
  (3) compliance with laws affecting the conduct of business; or
  (4) effect on market competition.
(b) The commissioner has authority under Insurance Code §848.152(d) to set and collect fees in an amount sufficient to pay the reasonable expenses of the department and attorney general in administering Insurance Code Chapter 848, including direct and indirect expenses incurred by the department, the attorney general, and their contractors in examining and reviewing HCCs. The department will maintain active oversight of individuals performing examination functions to assure that the examination fee reflects expenses that are reasonable and necessary. The examination fee will include the actual salary, fees, and expenses of the examiners directly attributable to the examination as follows:
  (1) any actual salary amount included in an examination fee for an examiner who is a department employee will be the part of the annual salary attributable to each hour an examiner examines the HCC;
  (2) any expenses included in an examination fee for an examiner who is a department employee will be actual expenses incurred by an examiner and attributable to the examination, including the actual cost of:
    (A) transportation;
    (B) lodging;
    (C) meals;
    (D) subsistence expenses;
    (E) parking fees; and
    (F) department overhead expense; and
  (3) any amount included as an examination fee or expense by an examiner who is not a department employee will be determined according to the terms of the contract between the examiner and the department.
(c) An HCC must pay to the department annually an assessment as set forth in paragraphs (1) - (6) of this subsection.
  (1) On or before January 31 of each year, each certified HCC must submit to the department a statement of its gross revenues for the previous calendar year.
  (2) On or before January 31, 2014, and annually thereafter, the department will calculate the cost by fiscal year to administer Insurance Code Chapter 848 and this subchapter, including direct and indirect expenses incurred by the department and the attorney general attributable to carrying out their responsibilities under Chapter 848, but excluding examination expenses billed directly to an HCC.
  (3) On or before April 1, 2014, and annually thereafter, the department will assess all certified HCCs on a pro rata basis for the expenses determined pursuant to paragraph (2) of this subsection, based on the total annual gross revenues reported by the HCCs. The assessment amount for each HCC will be adjusted by the amount of any application fees received from the HCC.
  (4) For purposes of reporting gross revenues relevant to this subsection, an HCC may choose to reduce its gross revenues in a clearly disclosed manner by amounts paid to individuals or entities unaffiliated with the HCC for the following items:
    (A) drugs or biological supplies that, by law, require a prescription to be dispensed; and
    (B) devices or medical supplies that, by law, require premarket approval by or premarket notification to the Food and Drug Administration.
  (5) On receipt of an assessment pursuant to paragraph (3) of this subsection, the HCC must pay the assessment amount before the later of 30 days following receipt of the assessment or May 1.
  (6) The department may issue additional assessments as necessary to fully fund the expense of regulation under Insurance Code Chapter 848 and this subchapter.
(d) When an HCC has been notified by the department of a pending examination under this section, it may request that it instead submit a renewal application and that the examination be converted into a renewal review.
  (1) To initiate the request, the HCC must file the Request to Convert to Renewal of Certificate of Authority to Do the Business of a Health Care Collaborative (HCC) in the State of Texas form.
  (2) The HCC must submit the request prior to the issuance of any draft examination report.
  (3) If the department approves the request, the HCC must file an application for renewal within 30 days of the approval to convert to renewal review. The application filing must comply with §13.424 of this title (relating to Certificate of Authority Renewal Requirements).
  (4) The subsequent renewal date for the HCC will be 12 months following the approval date of the application to renew.

Source Note: The provisions of this §13.421 adopted to be effective March 31, 2013, 38 TexReg 2100