(a) The Board of Trustees may approve a health maintenance organization (HMO) to offer a health care services plan to participants in the GBP. The Board of Trustees may:      
        (1) utilize a bidding process to approve one or more HMOs in areas of the state determined by the Board of Trustees to be regional bidding areas (RBAs);       
        (2) utilize an application process to approve one or more HMOs in areas of the state determined by the Board of Trustees to be non-bidding areas;       
        (3) determine the criteria to be used to approve the HMOs for the RBAs and non-bidding areas;       
        (4) determine the number of HMOs to approve in each RBA and non-bidding area; and       
        (5) determine the length of the contracts with the approved HMOs.       
      (b) In order to seek approval, an HMO must submit to ERS:      
        (1) a separate application to provide health care services in each area of interest within the state of Texas determined by the Board of Trustees to be non-bidding areas; or       
        (2) a proposal, in response to a request for bid, in the format determined by ERS to provide health care services in one or more of the designated RBAs.       
      (c) An HMO seeking Board of Trustees' approval of its proposal in response to a request for bid in one or more of the RBAs must demonstrate compliance with the following conditions to the satisfaction of the Board of Trustees:      
        (1) the HMO must be licensed by the Texas Department of Insurance to operate in the state of Texas;       
        (2) the HMO must have prior experience providing health care services in the RBA for at least 6 months prior to September 1 of the fiscal year in which the proposal is due to be filed with ERS;       
        (3) the HMO must have the capacity to provide adequate health care services to the GBP participants in the relevant RBAs;       
        (4) the HMO must propose rates at the time and in the format prescribed by ERS. If the HMO's proposed rates are adopted by the Board of Trustees, the HMO may not modify the rates without the approval of the Board of Trustees;       
        (5) the HMO must submit a separate proposal in order to request expansion into a non-contiguous service area;       
        (6) the HMO must agree to all provisions contained in the contract between ERS and the HMO as adopted for the duration of the contract;       
        (7) the HMO must provide standardized benefits as described in the contract between ERS and the HMO;       
        (8) the HMO must agree that if the HMO fails to maintain compliance with the contract, ERS has the right to cancel the contract with that HMO and seek other remedies as specified in the contract; and       
        (9) the HMO must agree that if the HMO loses its Texas state license, it will automatically become ineligible to offer its health care services plan to participants in the GBP.       
      (d) An HMO, seeking Board of Trustees' approval of its application to provide health care services in one or more of the non-bidding areas must demonstrate compliance with all of the conditions set forth in subsection (c) of this section to the satisfaction of the Board of Trustees.     
     Source Note:        The provisions of this §81.3 adopted to be effective September 1, 1985, 10 TexReg 2321; amended to be effective September 1, 1986, 11 TexReg 3862; amended to be effective October 14, 1986, 11 TexReg 4114; amended to be effective December 19, 1986, 11 TexReg 5133; amended to be effective November 1, 1987, 12 TexReg 3480; amended to be effective February 16, 1988, 13 TexReg 625; amended to be effective March 28, 1989, 14 TexReg 1371; amended to be effective March 27, 1990, 15 TexReg 1411; amended to be effective August 21, 1990, 15 TexReg 4504; amended to be effective May 19, 1992, 17 TexReg 3252; amended to be effective September 2, 1993, 18 TexReg 5594; amended to be effectiveFebruary 21, 1994, 19 TexReg 806; amended to be effective January 25, 1995, 20 TexReg 151;   amended to be effective February 16, 1998, 23 TexReg 1099; amended to be effective March 26, 2000, 25 TexReg 2400; amended to be effective July 10, 2000, 25 TexReg 6557; amended to be effective September 13, 2001, 26 TexReg 6962; amended to be effective December 31, 2003, 28 TexReg 11612; amended to be effective May 3, 2006, 31 TexReg 3588; amended to be effective June 5, 2008, 33 TexReg 4332; amended to be effective March 15, 2010, 35 TexReg 2202; amended to be effective December 22, 2011, 36 TexReg 8574; amended to be effective December 26, 2013, 38 TexReg 9374; amended to be effective September 5, 2016, 41 TexReg 6754