1. (a) Any delegation of any function pursuant to the Insurance Code Chapters 843 and 1272 and applicable insurance laws and regulations of this state that apply to HMOs by an HMO shall comply with this subchapter.
2. (b) Oversight by the department does not relieve the HMO of responsibility for monitoring and oversight of its delegated entities.
3. (c) Prior to entering into, renewing or amending a delegation agreement, an HMO shall make a reasonable effort to evaluate the delegated entity's current and prospective ability to perform the functions to be delegated, including, but not limited to, the solvency and financial operations of the delegated entity and the projected financial effects of the agreement upon the delegated entity.

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

   1. (1) quality of care;
   2. (2) continuity of care, including a plan for transferring enrollees to new providers in the event of termination of the delegation agreement; and
   3. (3) processing, adjudication and payment of claims.
5. (e) The department may require an HMO to immediately terminate any delegation agreement to ensure that the HMO is in compliance with the Insurance Code Chapters 843 and 1272 and applicable insurance laws and regulations of this state that apply to HMOs.
6. (f) The HMO retains ultimate responsibility for any and all functions delegated.
7. (g) A delegated entity's failure to comply with applicable statutes or rules constitutes a violation of the Insurance Code Chapter 843 and 1272 and applicable insurance laws and regulations of this state that apply to HMOs by the delegating HMO.
8. (h) An HMO is responsible for monitoring each delegated entity with which it contracts to ensure compliance with all applicable statutes and rules, as well as for solvency.
9. (i) An HMO shall report to the department, within a reasonable time, all penalties assessed against a delegated entity under the provisions of the delegation agreement.
10. (j) If an HMO cannot ensure that a delegated entity is performing all delegated functions in accordance with all applicable statutes, rules, or an order issued by the department pursuant to this subchapter, the HMO shall resume all delegated functions from the delegated entity.
11. (k) If a license is required for any function delegated by an HMO, the HMO must ensure that the delegated entity or third party performing the function has a current appropriate license.
12. (l) Upon termination of a delegation agreement by either party, the HMO shall notify the department.

Source Note:The provisions of this §11.2603 adopted to be effective October 13, 2002, 27 TexReg 9585; amended to be effective November 15, 2006, 31 TexReg 9298.