Notice, Anhydrous ammonia cargo tanks,
43.6"16" ARC 7628A 864

Filed Emergency, Anhydrous ammonia cargo
tanks, 43.6"16" ARC 7629A 887

ALL AGENCIES

Schedule for rule making 856

Publication procedures 857

Agency identification numbers 862

ATTORNEY GENERAL

Opinions summarized 915

CITATION OF ADMINISTRATIVE RULES 855

DENTAL EXAMINERS BOARD[650]

PUBLIC HEALTH DEPARTMENT[641]"umbrella"

Filed, Continuing education, 25.7
ARC 7632A 889

Filed, Deep sedation/general anesthesia,
parenteral conscious sedation, 29.1 to 29.12
ARC 7634A 889

Filed, Disciplinary hearing panels; suspension
and reexamination, 51.4(1), 51.12(7)
ARC 7633A 889

ELDER AFFAIRS DEPARTMENT[321]

Filed Emergency After Notice, Exception
authority granted to executive director,
1.2 ARC 7614A 887

Filed, AOA service delivery, 7.3 ARC 7613A 890

HUMAN SERVICES DEPARTMENT[441]

Notice, Medicaid policy for deprived child,
75.54(3)"c" ARC 7617A 864

Notice, Elderly waiver program, 83.22(1)"b"
ARC 7618A 865

Filed, Managed health care providers, 88.5,
88.43(1), rescind 88.48(1)"i"
ARC 7619A 890

Filed, Paternity, 99.27 ARC 7620A 891

Filed, Rehabilitative treatment and supportive
services (RTSS), 108.7(13), 114.2, 114.7,
152.2(23), 152.21 to 152.23, 156.7(2),
182.5(5), 185.9 to 185.11, 185.101, 185.108,
185.112 ARC 7621A 891

INSPECTIONS AND APPEALS DEPARTMENT[481]

Notice, Hospitals, 51.32(2), 51.38(1)
ARC 7623A 865

Filed, Food and consumer safety, bottled drinking
water, egg handling, personnel hygiene,
ch 30 title, 31.2, 31.3, 32.6, 36.3, 36.6,
36.12, 36.13 ARC 7624A 893

INSURANCE DIVISION[191]

COMMERCE DEPARTMENT[181]"umbrella"

Filed, Health care plans, 35.22 to 35.29,
36.4(8), amendments to chs 71 and 75
ARC 7611A 894

MEDICAL EXAMINERS BOARD[653]

PUBLIC HEALTH DEPARTMENT[641]"umbrella"

Notice, Impaired physician review committee,
12.16 ARC 7630A 866

PETROLEUM UST FUND BOARD,
IOWA COMPREHENSIVE[591]

Notice, Remedial or insurance claims,
11.1(3)"n"(3) ARC 7615A 866

Notice, RBCA analysis on "monitor only" sites,
11.8 ARC 7616A 867

PUBLIC HEALTH DEPARTMENT[641]

Notice, Tattooing, 22.1 to 22.7 ARC 7642A 868

Notice, Gambling treatment program, ch 162
ARC 7641A 870

PUBLIC HEARINGS

Summarized list 858

REAL ESTATE APPRAISER EXAMINING
BOARD[193F]

Professional Licensing and Regulation Division[193]

COMMERCE DEPARTMENT[181]"umbrella"

Notice, Examinations and continuing education,
3.3(1), 4.3, ch 6 ARC 7631A 875

REGENTS BOARD[681]

Notice, Regent institutions--Iowa resident
tuition and fees, 1.4(2)"i" ARC 7627A 879

Notice, Personnel administration, 3.39
ARC 7626A 879

Notice, Purchasing--vendors, 8.9(1)"a"
ARC 7625A 879

REVENUE AND FINANCE DEPARTMENT[701]

Notice, Interest rate--1998, 10.2(17)
ARC 7635A 880

Notice, Model recordkeeping and retention
regulation, 11.4(4), 38.3(1), 41.1, 51.3(1),
57.3(1), 67.3, 81.4, 86.3(1), 89.2(4), 103.4
ARC 7636A 880

Filed, Individual, corporate and franchise tax,
10.6, 42.12, 50.1, 50.2, 50.5, 50.8, 50.9,
51.1(2), 52.1(2), 52.5(2), 52.7, 52.14,
53.10, 53.12, 54.7(3), 59.1, 59.9, 59.21
ARC 7639A 911

Filed, Sales and use tax, 16.51(3), 16.52, 17.9,
18.20(3), 18.29(7), 18.36(4), 30.1(1)
ARC 7638A 912

Filed, Property tax, 71.20(1), 71.21, 75.3, 78.3,
80.1, 80.2, 80.7, 123.3, 123.4 ARC 7637A 912

SECRETARY OF STATE[721]

Notice, Election forms and voting systems,
21.800(3), 22.201(2), 22.221 ARC 7622A 884

SUPREME COURT

Decisions summarized 919

TRANSPORTATION DEPARTMENT[761]

Notice, Financial liability coverage cards,
425.10(8), ch 641 ARC 7612A 884

USURY

Notice 886

UTILITIES DIVISION[199]

COMMERCE DEPARTMENT[181]"umbrella"

Filed, Management efficiency, 29.3(1), rescind
29.5 ARC 7643A 913

VETERINARY MEDICINE BOARD[811]

Notice Terminated, Veterinary technician,
8.1 ARC 7610A 886

It also contains Proclamations and Executive Orders of the Governor which are general and permanent in nature; Economic Impact Statements to proposed rules and filed emergency rules; Objections filed by Administrative Rules Review Committee, Governor or the Attorney General; and Delay by the Committee of the effective date of filed rules; Regulatory Flexibility Analyses and Agenda for monthly Administrative Rules Review Committee meetings. Other "materials deemed fitting and proper by the Administrative Rules Review Committee" include summaries of Public Hearings, Attorney General Opinions and Supreme Court Decisions.

The Bulletin may also contain Public Funds Interest Rates [12C.6]; Workers' Compensation Rate Filings [515A.6(7)]; Usury [535.2(3)"a"]; Agricultural Credit Corporation Maximum Loan Rates [535.12]; and Regional Banking--Notice of Application and Hearing [524.1905(2)].

PLEASE NOTE: Italics indicate new material added to existing rules; strike through letters indicate deleted material.

KATHLEEN K. BATES, Administrative Code Editor Telephone: (515)281-3355

ROSEMARY DRAKE, Assistant Editor (515)281-7252

First quarter July 1, 1997, to June 30, 1998 $237.00 plus $11.85 sales tax

Second quarter October 1, 1997, to June 30, 1998 $178.00 plus $8.90 sales tax

Third quarter January 1, 1998, to June 30, 1998 $118.00 plus $5.90 sales tax

Fourth quarter April 1, 1998, to June 30, 1998 $ 60.00 plus $3.00 sales tax

Single copies may be purchased for $17.50 plus $0.88 tax. Back issues may be purchased if the issues are available.

Prices for the Iowa Administrative Code and its Supplements are as follows:

Iowa Administrative Code - $1,086.00 plus $54.30 sales tax

(Price includes 22 volumes of rules and index, plus a one-year subscription to the Code Supplement and the Iowa Administrative Bulletin. Additional or replacement binders can be purchased for $10.55 plus $0.53 tax.)

Iowa Administrative Code Supplement - $382.00 plus $19.10 sales tax

(Subscription expires June 30, 1998)

All checks should be made payable to the Iowa State Printing Division. Send all inquiries and subscription orders to:

Customer Service Center

Department of General Services

Hoover State Office Building, Level A

Des Moines, IA 50319

Telephone: (515)242-5120

PRINTING SCHEDULE FOR IAB
ISSUE NUMBER	SUBMISSION DEADLINE	ISSUE DATE
12	Friday, November 14, 1997	December 3, 1997
13	Friday, November 28, 1997	December 17, 1997
14	Friday, December 12, 1997	December 31, 1997

PLEASE NOTE:

Rules will not be accepted after 12 o'clock noon on the Friday filing deadline days unless prior approval has been received from the Administrative Rules Coordinator's office.

If the filing deadline falls on a legal holiday, submissions made on the following Monday will be accepted.

TO: Administrative Rules Coordinators and Text Processors of State Agencies

FROM: Kathleen K. Bates, Iowa Administrative Code Editor

SUBJECT: Publication of Rules in Iowa Administrative Bulletin

The Administrative Code Division uses Interleaf 6 to publish the Iowa Administrative Bulletin and can import documents directly from most other word processing systems, including Ami Pro, Microsoft Word, Professional Write, Word for Windows (Word 7 or earlier), and WordPerfect.

1. To facilitate the processing of rule-making documents, we request a 3.5\ High Density (not Double Density) IBM PC-compatible diskette of the rule making. Please indicate on each diskette the following information: agency name, file name, format used for exporting, and chapter(s) amended. Diskettes may be delivered to the Administrative Code Division, 4th Floor, Lucas State Office Building or included with the documents submitted to the Governor's Administrative Rules Coordinator.

2. Alternatively, if you have Internet E-mail access, you may send your document as an attachment to an E-mail message, addressed to both of the following:

bcarr@legis.state.ia.us

kbates@legis.state.ia.us

Please note that changes made prior to publication of the rule-making documents are reflected on the hard copy returned to agencies by the Governor's office; diskettes are returned unchanged.

Your cooperation helps us print the Bulletin more quickly and cost-effectively than was previously possible and is greatly appreciated.

Guide to Rule Making, June 1995 Edition, available upon request to the Iowa Administrative Code Division, Lucas State Office Building, Fourth Floor, Des Moines, Iowa 50319.

The Administrative Rules Review Committee voted to request that Agencies comply with Iowa Code section 17A.4(1)"b" by allowing the opportunity for oral presentation (hearing) to be held at least twenty days after publication of Notice in the Iowa Administrative Bulletin.

LABOR SERVICES DIVISION[347]
General industry safety and health, 10.20 IAB 10/22/97 ARC 7608A	1000 E. Grand Ave. Des Moines, Iowa	November 13, 1997 9 a.m. (If requested)
NATURAL RESOURCE COMMISSION[571]
Wild turkey spring hunting, 98.12 IAB 10/8/97 ARC 7577A	Wildlife Bureau Office Wallace State Office Bldg. Des Moines, Iowa	November 5, 1997 10 a.m.
PETROLEUM UST FUND BOARD, IOWA COMPREHENSIVE[591]
Remedial and insurance claims, 11.1(3)"n"(3) IAB 11/5/97 ARC 7615A	Conference Room--6th Floor Lucas State Office Bldg. Des Moines, Iowa	November 25, 1997 10 a.m.
Payments for RBCA analysis on "monitor only" sites, 11.8 IAB 11/5/97 ARC 7616A	Conference Room--6th Floor Lucas State Office Bldg. Des Moines, Iowa	November 25, 1997 10 a.m.
PUBLIC HEALTH DEPARTMENT[641]
Tattooing, 22.1 to 22.7 IAB 11/5/97 ARC 7642A	Conference Room--3rd Floor Side One Lucas State Office Bldg. Des Moines, Iowa	November 26, 1997 10 a.m.
Renovation, remodeling, and repainting--lead hazard notification process, ch 69 IAB 10/22/97 ARC 7602A (ICN Network)	Buena Vista University Room 7B W. 4th St. and College Storm Lake, Iowa	November 13, 1997 1 p.m.
	Kirkwood Community College The Farm Bldg., Room 32B 6301 Kirkwood Blvd. S.W. Cedar Rapids, Iowa	November 13, 1997 1 p.m.
	Hawkeye Community College Tama Hall, Room 110 1501 E. Orange Waterloo, Iowa	November 13, 1997 1 p.m.
	Indian Hills Community College Advanced Tech. Center, Room 108 525 Grandview Ave. Ottumwa, Iowa	November 13, 1997 1 p.m.
	North Iowa Area Community College Career Bldg., Room 129 500 C Dr. Mason City, Iowa	November 13, 1997 1 p.m.
PUBLIC HEALTH DEPARTMENT[641] (ICN Network) (Cont'd)	Southwestern Community College Instructional Center, Room 207 1501 W. Townline Creston, Iowa	November 13, 1997 1 p.m.
	ICN Room--3rd Floor Lucas State Office Bldg. Des Moines, Iowa	November 13, 1997 1 p.m.
Lead professional certification, amendments to ch 70 IAB 10/22/97 ARC 7603A (ICN Network)	Buena Vista University Room 7B W. 4th St. and College Storm Lake, Iowa	November 13, 1997 10 a.m.
	Kirkwood Community College The Farm Bldg., Room 32B 6301 Kirkwood Blvd. S.W. Cedar Rapids, Iowa	November 13, 1997 10 a.m.
	Hawkeye Community College Tama Hall, Room 110 1501 E. Orange Waterloo, Iowa	November 13, 1997 10 a.m.
	Indian Hills Community College Advanced Tech. Center, Room 108 525 Grandview Ave. Ottumwa, Iowa	November 13, 1997 10 a.m.
	North Iowa Area Community College Career Bldg., Room 129 500 C Dr. Mason City, Iowa	November 13, 1997 10 a.m.
	Southwestern Community College Instructional Center, Room 207 1501 W. Townline Creston, Iowa	November 13, 1997 10 a.m.
	ICN Room--3rd Floor Lucas State Office Bldg. Des Moines, Iowa	November 13, 1997 10 a.m.
Love our kids grant, ch 141 IAB 10/22/97 ARC 7604A (ICN Network)	National Guard Armory 1712 LeClark Rd. Carroll, Iowa	November 18, 1997 1 to 2 p.m.
	National Guard Armory 1000 Walnut St. Mt. Pleasant, Iowa	November 18, 1997 1 to 2 p.m.
	National Guard Armory 1160 10th St. S.W. Mason City, Iowa	November 18, 1997 1 to 2 p.m.
	ICN Room--3rd Floor Lucas State Office Bldg. Des Moines, Iowa	November 18, 1997 1 to 2 p.m.
	Iowa Braille and Sight Saving School 1002 G Ave. Vinton, Iowa	November 18, 1997 1 to 2 p.m.
PUBLIC HEALTH DEPARTMENT[641] (ICN Network) (Cont'd)	National Guard Armory 11 E. 23rd St. Spencer, Iowa	November 18, 1997 1 to 2 p.m.
Gambling treatment program, ch 162 IAB 11/5/97 ARC 7641A (ICN Network)	ICN Room 326 Lucas State Office Bldg. Des Moines, Iowa	November 25, 1997 10 a.m.
	Scott Community College Room 210 500 Belmont Rd. Bettendorf, Iowa	November 25, 1997 10 a.m.
	Loess Hills AEA ICN Room (6 miles east of Council Bluffs on Hwy. 92) Council Bluffs, Iowa	November 25, 1997 10 a.m.
	Dubuque AEA ICN Classroom 2310 Chaney Rd. Dubuque, Iowa	November 25, 1997 10 a.m.
	Western Hills AEA Room 209A 1520 Morningside Ave. Sioux City, Iowa	November 25, 1997 10 a.m.
PUBLIC SAFETY DEPARTMENT[661]
Building code--manufactured homes, 16.626 IAB 10/22/97 ARC 7609A	Leavitt Room Des Moines Botanical Center 909 E. River Dr. Des Moines, Iowa	November 20, 1997 10:30 a.m.
REGENTS BOARD[681]
Regent institutions--Iowa resident tuition and fees, 1.4(2)"i" IAB 11/5/97 ARC 7627A	Conference Room First Floor West Old Historical Bldg. Des Moines, Iowa	November 26, 1997 2 p.m.
Personnel administration, 3.39 IAB 11/5/97 ARC 7626A	Conference Room First Floor West Old Historical Bldg. Des Moines, Iowa	November 26, 1997 2 p.m.
Consent for purchasing--removal of regents' roll call vote, 8.9(1)"a" IAB 11/5/97 ARC 7625A	Conference Room First Floor West Old Historical Bldg. Des Moines, Iowa	November 26, 1997 2 p.m.
SECRETARY OF STATE[721]
Election forms and voting systems, 21.800(3)"b"(1), 22.201(2), 22.221 IAB 11/5/97 ARC 7622A	Office of Secretary of State Second Floor Hoover State Office Bldg. Des Moines, Iowa	November 25, 1997 1:30 p.m.
SOIL CONSERVATION DIVISION[27]
Agricultural drainage wells-- alternative drainage system assistance program, ch 30 IAB 10/22/97 ARC 7601A	Co. Extension Meeting Room Wright County Extension Service 210 1st St. S.W. Clarion, Iowa	November 13, 1997 10 a.m.
	Courtroom Pocahontas County Courthouse Pocahontas, Iowa	November 13, 1997 1:30 p.m.
	Conference Room--1st Floor Wallace State Office Bldg. Des Moines, Iowa	November 14, 1997 10 a.m.
TRANSPORTATION DEPARTMENT[761]
Financial liability coverage cards, 425.10(8), ch 641 IAB 11/5/97 ARC 7612A	Conference Room--Lower Level Park Fair Mall 100 Euclid Ave. Des Moines, Iowa	December 2, 1997 10 a.m. (If requested)
UTILITIES DIVISION[199]
Electric franchise notice, 11.5(2)"d"; rescind 11.5(8) IAB 10/22/97 ARC 7600A	Hearing Room--1st Floor Lucas State Office Bldg. Des Moines, Iowa	November 18, 1997 10 a.m.

CITATION of Administrative Rules

The Iowa Administrative Code shall be cited as (agency identification number) IAC
(chapter, rule, subrule, lettered paragraph, or numbered subparagraph).

441 IAC 79 (Chapter)

441 IAC 79.1(249A) (Rule)

441 IAC 79.1(1) (Subrule)

441 IAC 79.1(1)"a" (Paragraph)

441 IAC 79.1(1)"a"(1) (Subparagraph)

The Iowa Administrative Bulletin shall be cited as IAB (volume), (number), (publication
date), (page number), (ARC number).

IAB Vol. XII, No. 23 (5/16/90) p. 2050, ARC 872A

"Umbrella" agencies and elected officials are set out below at the left-hand margin in CAPITAL letters.

Divisions (boards, commissions, etc.) are indented and set out in lowercase type under their statutory "umbrellas."

Other autonomous agencies which were not included in the original reorganization legislation as "umbrella" agencies are included alphabetically in small capitals at the left-hand margin, e.g., BEEF INDUSTRY COUNCIL, IOWA [101].

The following list will be updated as changes occur:

AGRICULTURE AND LAND STEWARDSHIP DEPARTMENT[21]

Agricultural Development Authority[25]

Soil Conservation Division[27]

ATTORNEY GENERAL[61]

AUDITOR OF STATE[81]

BEEF INDUSTRY COUNCIL, IOWA[101]

blind, department For The[111]

CITIZENS' AIDE[141]

CIVIL RIGHTS COMMISSION[161]

COMMERCE DEPARTMENT[181]

Alcoholic Beverages Division[185]

Banking Division[187]

Credit Union Division[189]

Insurance Division[191]

Professional Licensing and Regulation Division[193]

Accountancy Examining Board[193A]

Architectural Examining Board[193B]

Engineering and Land Surveying Examining Board[193C]

Landscape Architectural Examining Board[193D]

Real Estate Commission[193E]

Real Estate Appraiser Examining Board[193F]

Savings and Loan Division[197]

Utilities Division[199]

CORRECTIONS DEPARTMENT[201]

Parole Board[205]

CULTURAL AFFAIRS DEPARTMENT[221]

Arts Division[222]

Historical Division[223]

ECONOMIC DEVELOPMENT, IOWA DEPARTMENT OF[261]

City Development Board[263]

Iowa Finance Authority[265]

EDUCATION DEPARTMENT[281]

Educational Examiners Board[282]

College Student Aid Commission[283]

Higher Education Loan Authority[284]

Iowa Advance Funding Authority[285]

Libraries and Information Services Division[286]

Public Broadcasting Division[288]

School Budget Review Committee[289]

EGG COUNCIL[301]

ELDER AFFAIRS DEPARTMENT[321]

EMPLOYMENT SERVICES DEPARTMENT[341]

Job Service Division[345]

Labor Services Division[347]

ETHICS AND CAMPAIGN DISCLOSURE BOARD, IOWA[351]

EXECUTIVE COUNCIL[361]

FAIR BOARD[371]

GENERAL SERVICES DEPARTMENT[401]

HUMAN INVESTMENT COUNCIL[417]

HUMAN RIGHTS DEPARTMENT[421]

Community Action Agencies Division[427]

Criminal and Juvenile Justice Planning Division[428]

Deaf Services Division[429]

Persons With Disabilities Division[431]

Latino Affairs Division[433]

Status of Blacks Division[434]

Status of Women Division[435]

HUMAN SERVICES DEPARTMENT[441]

INSPECTIONS AND APPEALS DEPARTMENT[481]

Employment Appeal Board[486]

Foster Care Review Board[489]

Racing and Gaming Commission[491]

State Public Defender[493]

INTERNATIONAL NETWORK ON TRADE(INTERNET)[497]

LAW ENFORCEMENT ACADEMY[501]

LIVESTOCK HEALTH ADVISORY COUNCIL[521]

MANAGEMENT DEPARTMENT[541]

Appeal Board, State[543]

City Finance Committee[545]

County Finance Committee[547]

NARCOTICS ENFORCEMENT ADVISORY COUNCIL[551]

NATIONAL AND COMMUNITY SERVICE, IOWA COMMISSION ON[555]

NATURAL RESOURCES DEPARTMENT[561]

Energy and Geological Resources Division[565]

Environmental Protection Commission[567]

Natural Resource Commission[571]

Preserves, State Advisory Board[575]

PERSONNEL DEPARTMENT[581]

PETROLEUM UNDERGROUND STORAGE TANK FUND
BOARD, IOWA COMPREHENSIVE[591]

prevention of disabilities policy council[597]

PUBLIC DEFENSE DEPARTMENT[601]

Emergency Management Division[605]

Military Division[611]

PUBLIC EMPLOYMENT RELATIONS BOARD[621]

PUBLIC HEALTH DEPARTMENT[641]

Substance Abuse Commission[643]

Professional Licensure Division[645]

Dental Examiners Board[650]

Medical Examiners Board[653]

Nursing Board[655]

Pharmacy Examiners Board[657]

PUBLIC SAFETY DEPARTMENT[661]

RECORDS COMMISSION[671]

REGENTS BOARD[681]

Archaeologist[685]

REVENUE AND FINANCE DEPARTMENT[701]

Lottery Division[705]

SECRETARY OF STATE[721]

SEED CAPITAL CORPORATION, IOWA[727]

SESQUICENTENNIAL COMMISSION, IOWA STATEHOOD[731]

sheep and wool promotion board, iowa[741]

telecommunications and technology commission, iowa[751]

TRANSPORTATION DEPARTMENT[761]

Railway Finance Authority[765]

TREASURER OF STATE[781]

UNIFORM STATE LAWS COMMISSION[791]

VETERANS AFFAIRS COMMISSION[801]

veterinary medicine board[811]

voter registration commission[821]

wallace technology transfer foundation[851]

WORKFORCE DEVELOPMENT DEPARTMENT[871]

Industrial Services Division[873]

Labor Services Division[875]

Workforce Development Board and
Workforce Development Center Administration Division[877]

Pursuant to the authority of Iowa Code sections 159.5(11) and 200.14, the Iowa Department of Agriculture and Land Stewardship gives Notice of Intended Action to amend Chapter 43, "Fertilizers and Agricultural Lime," Iowa Administrative Code.

This amendment is intended to increase the maximum size of anhydrous ammonia cargo tanks which are used with anhydrous ammonia field application equipment.

Any interested person may make written suggestions or comments on the following proposed amendment prior to 4:30 p.m. on November 25, 1997. Such written material should be directed to John Whipple, Fertilizer Bureau Chief, Iowa Department of Agriculture and Land Stewardship, Wallace State Office Building, Des Moines, Iowa 50319.

This amendment was also Adopted and Filed Emergency and is published herein as ARC 7629A. The content of that submission is incorporated by reference.

This amendment is intended to implement Iowa Code chapter 200.

ARC 7617A

Pursuant to the authority of Iowa Code section 249A.4, the Department of Human Services proposes to amend Chapter 75, "Conditions of Eligibility," appearing in the Iowa Administrative Code.

This amendment revises Medicaid policy to provide that when a child is considered deprived due to the unemployment of the parents, there is no longer a 30-day delay in Medicaid eligibility.

Prior to the state welfare reform initiative in 1993, if both parents were in the home a child was considered deprived if either of the parents was unemployed. In order to be considered unemployed, the parent had to be working 100 hours or less per month, and benefits could not begin until the parent had been considered unemployed for 30 days.

Iowa obtained an 1115 waiver to waive the 100-hour rule for the Family Investment Program (FIP). However, the 30-day benefit delay continued to apply. Medicaid also followed these rules. This has resulted in increased complexity in program administration.

The Department has received clarification from the Health Care Financing Administration (HCFA) that even though a state has an 1115 waiver to eliminate the 100-hour rule for unemployed parents, the state cannot continue to apply the 30-day benefit delay provisions to Medicaid. Therefore, the rules are being amended so that the rules regarding the effective date of eligibility for all other FMAP-related households will also apply to unemployed parent households.

Families who are found eligible under the unemployed parent provisions will be entitled to Medicaid benefits as of the first day of the month in which eligibility is established as well as the three-month retroactive period if otherwise qualified.

Consideration will be given to all written data, views, and arguments thereto received by the Bureau of Policy Analysis, Department of Human Services, Hoover State Office Building, Des Moines, Iowa 50319-0114, on or before November 26, 1997.

This amendment is intended to implement Iowa Code section 249A.4.

The following amendment is proposed.

Amend subrule 75.54(3), paragraph "c," as follows:

c. The parent(s) is parents are considered unemployed. A child shall be eligible for assistance on the basis of being deprived of parental care or support by reason of both parents' being considered unemployed as described in subparagraphs (1) and (2) below. If either parent cannot be considered unemployed, then deprivation on the basis of unemployment does not exist.

When deprivation exists because of parental absence or incapacity, that deprivation factor supersedes and the case shall not be processed on the basis of a parent's the parents' unemployment.

(1) When both parents of a common child are in the home and neither parent is incapacitated as defined at paragraph 75.54(3)"b," eligibility for assistance shall be determined based on the unemployment of the parent parents, without regard to either parent's hours of employment, income or resources. Unless the person is excluded in accordance with the provisions of rule 441--75.59(249A), for the purpose of determining eligibility, the eligible group shall include the common child, any parent, and any deprived sibling of the common child living in the home with the common child as described at subrule 75.58(1). Each parent in an unemployed parent case shall meet the following requirements:

1. Both parents shall be unemployed for 30 days prior to receipt of assistance except as described below. Eligibility shall not be established to cover any of the 30-day period unless the provisions of 441--paragraph 76.5(2)"a" apply. Parents who are employed but whose earnings are insufficient to meet the needs of the family according to the schedule of needs as provided in subrule 75.58(2) shall be considered unemployed for the purpose of establishing eligibility under this subrule.

Applicants shall be subject to a 30-day delay in the date that eligibility can be granted based on unemployment of a parent. If either parent is currently working 100 or more hours per month, then the earliest date assistance shall begin is 30 days from the date of application for assistance. If both parents are currently working less than 100 hours per month, the 30-day period shall begin on the date that either parent last worked 100 or more hours. "Currently" means the number of hours worked or expected to be worked in the month of application.

When an existing eligible group reports a change that requires an eligibility redetermination to establish the continued unemployment of the parent, "currently" means the number of hours worked or expected to be worked in the month the change is reported. When the existing eligible group reports an anticipated change that requires an eligibility predetermination under the unemployed parent program, "currently" means the number of hours worked or expected to be worked in the month of report or in the month the change occurred, whichever is later.

When the applicant or recipient is self-employed, the hours of employment shall be established in accordance with either of the methods described below, at option of the applicant or recipient.

The hours of employment may be determined on the basis of the actual hours worked, when the actual hours can be verified by reliable written evidence from a disinterested third party, for example, the person who contracted the labor of the applicant or recipient.

The hours of employment may be calculated by dividing net income from self-employment by the federal or state minimum wage, whichever is greater. "Net monthly income" means income remaining after deduction of allowable business expenses as described in paragraphs 75.57(2)"f" through "j."

2. The parent who is an applicant and who is out of work due to refusal, without good cause, of a bona fide offer of employment for or training or for employment shall not be considered unemployed.

(2) After assistance is approved, when either parent is no longer considered unemployed, in accordance with subparagraph 75.53(3)"c"(3) or because of failure to apply for or draw job insurance benefits in accordance with the provisions of rule 441--75.3(249A), ineligibility shall result for those persons whose eligibility is dependent on the unemployment of both parents, for a minimum of one month.

ARC 7618A

Pursuant to the authority of Iowa Code section 249A.4, the Department of Human Services proposes to amend Chapter 83, "Medicaid Waiver Services," appearing in the Iowa Administrative Code.

This amendment adds two counties, Allamakee and O'Brien, to the Elderly Waiver program effective April 1, 1998. This brings the total number of counties served by the waiver to 89.

Consideration will be given to all written data, views, and arguments thereto received by the Bureau of Policy Analysis, Department of Human Services, Hoover State Office Building, Des Moines, Iowa 50319-0114, on or before November 26, 1997.

This amendment is intended to implement Iowa Code section 249A.4.

The following amendment is proposed.

Amend subrule 83.22(1), paragraph "b," as follows:

b. A resident of one of the following counties:

Adair	Davis	Jefferson	Polk
Allamakee	Decatur	Johnson	Pottawattamie
Appanoose	Delaware	Jones	Poweshiek
Benton	Des Moines	Keokuk	Ringgold
Black Hawk	Dickinson	Kossuth	Sac
Boone	Dubuque	Lee	Scott
Bremer	Emmet	Linn	Story
Buchanan	Fayette	Louisa	Tama
Buena Vista	Floyd	Lucas	Union
Butler	Franklin	Madison	Van Buren
Calhoun	Fremont	Marion	Wapello
Carroll	Greene	Marshall	Warren
Cass	Grundy	Mills	Washington
Cedar	Guthrie	Mitchell	Wayne
Cerro Gordo	Hamilton	Monona	Webster
Cherokee	Hancock	Montgomery	Winnebago
Chickasaw	Hardin	Muscatine	Winneshiek
Clarke	Harrison	O'Brien	Woodbury
Clay	Howard	Osceola	Worth
Clayton	Ida	Page	Wright
Clinton	Iowa	Palo Alto
Crawford	Jackson	Plymouth
Dallas	Jasper	Pocahontas

ARC 7623A

Pursuant to the authority of Iowa Code section 135B.7, the Department of Inspections and Appeals gives Notice of Intended Action to amend Chapter 51, "Hospitals," Iowa Administrative Code.

These amendments update references to reflect changes in Iowa Code chapter 135C definitions and other publications, and make a correction.

Interested persons may make written comments or suggestions on the proposed amendments on or before November 25, 1997. Written materials should be addressed to the Director, Department of Inspections and Appeals, Lucas State Office Building, Des Moines, Iowa 50319-0083; fax (515)242-6863.

These amendments are intended to implement Iowa Code chapter 135B.

The following amendments are proposed.

ITEM 1. Amend subrule 51.32(2), last unnumbered paragraph, as follows:

Reference sources to guide hospitals in the development of policies and procedures are: "Standards for Perinatal Centers," Sixth "Guidelines for Perinatal Services," Seventh Edition, Iowa Department of Public Health; and "Guidelines for Perinatal Care," Second Third Edition, American Academy of Pediatrics, American College of Obstetrics and Gynecology.

ITEM 2. Amend subrule 51.38(1) as follows:

51.38(1) Long-term care service definition. Long-term care service means any building or distinct part of a building utilized by the hospital for the provision of a service (except as provided by 51.34(2) 51.38(2) below) that falls within the definition of a health care facility as specified in Iowa Code chapter 135C, Iowa Code sections 135C.1(2), intermediate care facility, and 135C.1(3), skilled nursing facility, 135C and Iowa Code section 135C.1(12), nursing facility, as it would be applied were it not operating as part of a hospital licensed under Iowa Code chapter 135B.

ARC 7630A

Pursuant to the authority of Iowa Code section 147.76, the Iowa Board of Medical Examiners hereby gives Notice of Intended Action to amend Chapter 12, "Discipline," Iowa Administrative Code.

Chapter 12 is being amended by making changes to the rules on the impaired physician review committee by making technical corrections, adding the definition of initial agreement, and clarifying eligibility criteria related to the diversion of controlled substances.

Any interested party may submit written comments on the proposed amendments on or before November 25, 1997. Such written materials should be directed to Ann M.Martino, Executive Director, Iowa Board of Medical Examiners, 1209 East Court Avenue, Des Moines, Iowa 50309-0180, telephone (515)281-5171.

These amendments are intended to implement Iowa Code chapters 147, 148, 150, 150A, and 272C.

The following amendments are proposed.

ITEM 1. Amend subrule 12.16(1), definitions of "Impaired physician program contract" and "IPP," as follows:

"Impaired physician program recovery contract" or "contract" means the written document establishing the terms for participation in the impaired physician recovery program prepared by the impaired physician review committee.

"IPP" "IPRP" or "program" means the impaired physician recovery program.

Further amend subrule 12.16(1) by adding the following new definition in alphabetical order:

"Initial agreement" means the written document establishing the initial terms for participation in the impaired physician recovery program.

ITEM 2. Amend subrule 12.16(4), paragraph "a," as follows:

a. The licensee engaged in the unlawful diversion or distribution of controlled substances or illegal substances to a third party or for personal profit or gain;

ITEM 3. Amend subrule 12.16(5) as follows:

12.16(5) Type of program. The impaired physician recovery program is an individualized recovery or rehabilitation program designed to meet the specific needs of the impaired physician. The committee shall meet with the licensee and, in consultation with the licensee and upon the recommendation of an IPRC-approved evaluator, shall determine the type of recovery or rehabilitation program required to treat the licensee's impairment. The committee shall prepare an impaired physician program recovery contract, to be signed by the licensee, that shall provide a detailed description of the goals of the program, the requirements for successful completion, and the licensee's obligations therein.

ITEM 4. Amend subrule 12.16(6), introductory paragraph, as follows:

12.16(6) Terms of participation. A licensee shall agree to comply with the terms for participation in the IPP IPRP established in the initial agreement and contract. Terms of participation specified in the contract shall include, but are not limited to:

ITEM 5. Amend subrule 12.16(6), paragraph "c," as follows:

c. Practice restrictions. The IPRC may impose restrictions on the license to practice medicine as a term of the initial agreement or contract until such time as it receives a report from an approved evaluator that the licensee is capable of practicing with reasonable safety and skill. As a condition of participating in the program, a licensee is required to agree to restrict practice in accordance with the terms specified in the initial agreement or contract. In the event that the licensee refuses to agree to or comply with the restrictions established in the initial agreement or contract, the committee shall refer the licensee to the board for appropriate action.

ITEM 6. Amend subrule 12.16(7) as follows:

12.16(7) Limitations. The IPRC establishes the terms and monitors a participant's compliance with the program specified in the initial agreement and contract. The IPRC is not responsible for participants who fail to comply with the terms of or successfully complete the IPP IPRP. Participation in the program under the auspices of the IPRC shall not relieve the board of any duties and shall not divest the board of any authority or jurisdiction otherwise provided. Any violation of the statutes or rules governing the practice of medicine by a participant shall be referred to the board for appropriate action.

ARC 7615A

Pursuant to the authority of Iowa Code sections 455G.4(3), 455G.6(15), 455G.9 and 455G.21, the Iowa Comprehensive Petroleum Underground Storage Tank Fund Board (Board) proposes to amend Chapter 11, "Remedial or Insurance Claims," Iowa Administrative Code.

Chapter 11 describes the guidelines for reimbursement of remedial and insurance claims. This amendment will modify the current inability to pay criteria under which owners or operators can receive 100 percent reimbursement for corrective actions. This amendment will allow the Board to utilize the Iowa Department of Natural Resources' evaluation of ability to pay for individual claims and take into consideration the individual's cash flow when determining whether or not the individual should qualify for 100 percent reimbursement.

Any interested person may make written suggestions or comments on this proposed amendment on or before November 25, 1997. Such written comments should be directed to the Iowa Comprehensive Petroleum Underground Storage Tank Fund Board, Administrator, 1000 Illinois Street, Suite B, Des Moines, Iowa 50314.

Persons who want to orally convey their views should contact Patrick Rounds, Administrator, Iowa Comprehensive Petroleum Underground Storage Tank Fund Board, at (515)284-1616, during regular business hours.

There will be a public hearing on November 25, 1997, at 10 a.m. in the Conference Room of the Iowa Insurance Division, Sixth Floor, Lucas State Office Building, Des Moines, Iowa. Persons may present their views at this public hearing either orally or in writing.

This amendment will not necessitate additional annual expenditures exceeding $100,000 by political subdivisions or agencies and entities which contract with political subdivisions. Therefore, no fiscal note accompanies this Notice.

This amendment is intended to implement Iowa Code sections 455G.9 and 455G.21.

The following amendment is proposed.

Amend subparagraph 11.1(3)"n"(3) as follows:

(3) Claimant does not have a net worth of $15,000 or greater and has submitted documentation of net worth in accordance with Iowa Code section 455G.10(4) and 591--subrule 12.10(3) or the claimant is an individual who is financially unable to pay copayments associated with the cost of corrective action as determined by using the department's evaluation of ability to pay found at 567 IAC 135.17(455B).

ARC 7616A

Pursuant to the authority of Iowa Code sections 455G.4(3), 455G.6(15), 455G.9 and 455G.21, the Iowa Comprehensive Petroleum Underground Storage Tank Fund Board (Board) proposes to amend Chapter 11, "Remedial or Insurance Claims," Iowa Administrative Code.

Iowa Code section 455B.474 requires that the Department shall rely upon a risk-based screening level table as established by the American Society for Testing of Materials or another look-up table as determined by the Department by rule when classifying a site as either "low risk" or "no action required." However, 1997 Iowa Acts, House File 508, which created the risk-based corrective action standards and directed the Department to classify the sites does not allow the Department to require revision, modification or replacement of any site cleanup report, site assessment or remedial investigation previously accepted by the Department. Therefore, in order to receive a "no further action" or "monitor only" certificate, an RBCA analysis is required; however, the Department is not allowed to direct the owner to conduct such an investigation.

In order to be able to classify these sites utilizing an RBCA analysis and not violate the directive of the 1995 legislation, the Department has been reviewing previously accepted "high risk monitor" and "low risk monitor" sites to determine their compliance with RBCA principles. This process is very time-consuming and will take many years to complete. To expedite the process, this proposed rule will provide funding for owners to utilize certified groundwater professionals to conduct necessary fieldwork and complete a conversion of "monitor only" sites to RBCA formats so that "monitor only" and "no further action" certificates may be given to those sites that qualify.

Chapter 11 describes the guidelines for reimbursement under remedial and insurance claims. Iowa Code section 455G.9(1)"f" allows 100 percent funding up to $20,000 for the completion of site cleanup reports. Thereafter, costs are considered corrective action subject to the copayment requirements of Iowa Code section 455G.9(4). This amendment will create a new rule which will allow for 100 percent reimbursement of costs associated with the conversion of a previously accepted site cleanup report for all "monitor only" sites which are currently eligible for remedial or innocent landowner benefits. The amendment will increase the 100 percent funding of SCRs from $20,000 up to $30,000 for sites with previously accepted SCRs. This amendment will allow DNR to receive an RBCA conversion of "monitor only" sites without DNR having to direct the owner to do the conversion. Only those owners who voluntarily agree to have the conversion completed at 100 percent funding will receive this benefit. Those owners who choose not to voluntarily conduct the conversion, and those owners who are not otherwise eligible for benefits from this program, will have their sites reviewed internally by DNR and DNR's staff assistance contractor and will be notified by DNR of the results of the conversion after the internal review.

Any interested person may make written suggestions or comments on this proposed amendment on or before November 25, 1997. Such written comments should be directed to the Iowa Comprehensive Petroleum Underground Storage Tank Fund Board, Administrator, 1000 Illinois Street, Suite B, Des Moines, Iowa 50314.

Persons who want to orally convey their views should contact Patrick Rounds, Administrator, Iowa Comprehensive Petroleum Underground Storage Tank Fund Board, at (515)284-1616 during regular business hours.

There will be a public hearing on November 25, 1997, at 10 a.m. in the Conference Room of the Iowa Insurance Division, Sixth Floor, Lucas State Office Building, Des Moines, Iowa. Persons may present their views at this public hearing either orally or in writing.

This amendment will not necessitate additional annual expenditures exceeding $100,000 by political subdivisions or agencies and entities which contract with political subdivisions. Therefore, no fiscal note accompanies this Notice.

This amendment is intended to implement Iowa Code sections 455G.9 and 455G.21.

The following amendment is proposed.

Amend 591--Chapter 11 by adding the following new rule:

591--11.8(455G) Payments for conducting RBCA analysis on "monitor only" sites.

11.8(1) When reviewing applications for benefits for the cost of completing an RBCA analysis on a site which has an approved SCR requiring "monitoring only," the criteria in this rule shall apply when determining payment eligibility.

11.8(2) Tier 1, Tier 2, and Tier 3 risk-based corrective action analysis must have budgets preapproved by the board or its administrator prior to any costs being incurred.

11.8(3) Benefits shall be limited to those costs associated with activities which are required to be completed in order for a Tier 1, Tier 2, or Tier 3 to be accepted by the department and which will determine the risk associated with the site.

11.8(4) Only sites which are currently eligible for benefits under this chapter are eligible for reimbursement of costs associated with activities under this rule.

11.8(5) One hundred percent of the costs may be preapproved not to exceed $10,000 for all activities associated with the completion of the Tier 1, Tier 2, or Tier 3 analysis. Costs which exceed $10,000 will be subject to the limitations of Iowa Code section 455G.9(1)"f."

ARC 7642A

Pursuant to the authority of Iowa Code section 135.37, the Department of Public Health hereby gives Notice of Intended Action to amend Chapter 22, "Practice of Tattooing," Iowa Administrative Code.

The purpose of these amendments is to clarify and provide additional infection control procedures and to facilitate the performance of inspections by county health officials.

Any interested person may make written suggestions or comments on the proposed amendments on or before November 25, 1997. Send written comments to Carolyn Vogel, Bureau of Disease Prevention, Department of Public Health, Lucas State Office Building, Des Moines, Iowa 50319-0075, fax (515)281-4570.

Also, there will be a public hearing on November 26, 1997, at 10 a.m., Third Floor Conference Room, Side One, Lucas State Office Building, Des Moines, Iowa, at which time persons may present their views.

Any persons who plan to attend the public hearing and have special requirements, such as hearing or mobility impairments, should contact the Department of Public Health and advise of specific needs.

These amendments are intended to implement Iowa Code section 135.37.

The following amendments are proposed.

ITEM 1. Amend rule 641--22.1(135) as follows:

641--22.1(135) Purpose. The purpose of this chapter is to stipulate the permit and operational requirements for tattoo artists and tattoo establishments.

NOTE: Tattoo artists and tattoo establishments which are in compliance with Iowa Code section 135.37 and these rules are not relieved from the requirements of any other applicable state laws, or local ordinances.

ITEM 2. Amend rule 641--22.2(135), definition of "Tattoo establishment," as follows:

"Tattoo establishment" means the location building or mobile unit where tattooing is practiced.

ITEM 3. Amend rule 641--22.3(135) as follows:

641--22.3(135) General provisions.

22.3(1) Tattoo artists and tattoo establishments who fail to meet the requirements of Iowa Code section 135.37 or these rules shall be guilty of a serious misdemeanor.

22.3(2) No person shall tattoo a minor. Violators shall be guilty of a serious misdemeanor.

22.3(3) No tattoo artist shall engage in the practice of tattooing without first obtaining a tattoo artist permit from the department.

22.3(4) Tattoo artists and tattoo establishments which are in compliance with Iowa Code section 135.37 and Iowa Administrative Code 641--Chapter 22 are not relieved from the requirements of any other applicable state laws or local ordinances.

22.3(5) Tattooing shall be practiced in facilities which have received a tattoo establishment permit from the department.

22.3(6) Tattooing shall not be practiced in a residence unless the tattoo establishment is completely separated from the living quarters by a solid permanent partition. A solid door leading to the living quarters shall be permitted, provided it remains closed during business hours. A direct outside entrance to the tattoo establishment shall be provided.

22.3(7) Tattoo establishments shall be inspected annually.

ITEM 4. Amend rule 641--22.4(135) as follows:

641--22.4(135) Sanitation and infection control.

22.4(1) Tattooing shall not be practiced in a residence unless the tattoo establishment is completely separated from the living quarters by a solid permanent partition. A solid door leading to the living quarters shall be permitted, provided it remains closed during business hours. A direct outside entrance to the tattoo establishment shall be provided. Tables, chairs, and other general use equipment shall be constructed of impervious or smooth and easily cleanable material.

22.4(2) Tattoo establishments shall have potable hot and cold water under pressure. A sink for hand washing supplied with potable, hot and cold running water shall be available in or directly adjacent to the tattooing area. Hand-washing facilities shall be supplied with liquid soap and single-use paper towels.

22.4(3) All tattoo establishments shall be equipped with toilet and handwashing facilities which are connected to water and sewage disposal systems. Handwashing lavatories shall be supplied with cleansing compound and single towel service. Toilet facilities must be available for employee or patron use.

22.4(4) The tattoo establishment, including the immediate area where the tattoo procedure is to be performed, shall have an area of not less than 150 square feet and shall be adequately lighted and ventilated.

22.4(5) Floors in the immediate area where the tattoo procedure is to be performed shall have impervious, smooth, washable surfaces.

22.4(6) The entire premises and all facilities used in connection therewith shall be maintained in a clean, sanitary, vermin-free condition and in good repair.

22.4(7) All refuse shall be stored in rigid containers with tight-fitting covers plastic liners that are emptied at least once each business day.

22.4(8) Closed cabinets shall be used for the exclusive storage of instruments, dyes, pigments, stencils, tattoo machines, and other equipment shall be provided for each tattoo artist.

22.4(9) Smoking or consumption of food or drink shall not be allowed in any area where the actual tattoo procedure is being performed.

NOTE: This restriction does not apply to other areas in the tattoo establishment where the actual tattoo procedure is not performed.

22.4(10) No animals, except guide dogs for visually or hearing impaired persons, shall be permitted in a tattoo establishment.

ITEM 5. Rescind rule 641--22.5(135) and adopt the following new rule 641--22.5(135) in lieu thereof:

641--22.5(135) Equipment.

22.5(1) Cups to hold ink or dye shall be for single-patron use.

22.5(2) Any dye or ink in which needles were dipped shall not be used on another person.

22.5(3) All tubes, needle bars, and needles used for the tattoo procedure that are not sterile, single-patron use and disposable shall be physically cleaned with a detergent according to manufacturer's recommendations and then steam sterilized or dry-heat sterilized between patrons.

22.5(4) Steam sterilization shall be at 250 degrees Fahrenheit (121 degrees Celsius) for 15 minutes at a minimum pressure of 15 pounds per square inch.

22.5(5) Dry-heat sterilization shall be at 350 degrees Fahrenheit (170 degrees Celsius) for one hour.

22.5(6) Sterilizers shall be monitored monthly with spores of B. subtilis and records maintained of results.

22.5(7) Written procedures to follow in the event of positive spore tests are to be available for each tattoo establishment; for example, materials processed in that sterilizer, dating from the sterilization cycle having the positive biological indicator to the next cycle showing satisfactory biologic indicator challenge results, must be considered nonsterile and must be reprocessed before being used.

22.5(8) All establishments shall be equipped with a container designated for disposal of used needles and other sharps. A written plan for disposal is required.

22.5(9) Any bottles of solution shall be labeled as to contents and used according to manufacturer's directions.

22.5(10) Use of clippers is recommended for removal of unwanted hair. After use, clippers shall be cleaned with detergent and water and then disinfected with 70 percent ethyl or isopropyl alcohol for ten minutes or quaternary ammonium compounds as directed on the product label.

22.5(11) Razors shall be single-patron use and disposable.

22.5(12) Topical ointments shall be for single-patron use.

22.5(13) All equipment shall be maintained in a clean and sanitary condition.

ITEM 6. Amend rule 641--22.6(135) as follows:

641--22.6(135) Procedures.

22.6(1) For privacy purposes at the patron's request, there shall be in place (or readily available) a panel or other barrier of sufficient height and width to effectively separate the patron from any unwanted observers or waiting patrons. Panels or other barriers may be fixed or movable, rigid or flexible.

22.6(2) Tattoo artists shall scrub their hands thoroughly before beginning the tattoo. Hands shall be dried with individual single-use towels.

22.6(3) Tattoo artists shall wear clean outer garments. It is recommended, but not required, that sterile gloves be worn by the tattoo artists during the tattoo procedure. Gloves are to be changed after each tattoo. Hands are to be washed after gloves are removed.

22.6(4) The skin area to be tattooed shall first be cleansed with a germicidal soap and water. Single-use towels or sponges (gauze) shall be used during the cleansing procedure.

NOTE: Germicidal soaps may contain iodophor, chlorohexidine gluconate, or other active ingredient approved by the department.

22.6(5) Before placing the tattoo design on the patron's skin, the tattoo artist shall prepare the skin with an antiseptic such as 70 percent ethyl or isopropyl alcohol or 10 percent iodophor solution. , chlorohexidine gluconate solution, or other antiseptic approved by the department. The solution shall be applied with sterile cotton or sterile gauze.

22.6(6) Tattooing shall not be performed on any area where there is evidence of skin infection.

22.6(7) After the tattooing is completed, a sterile dressing shall be applied to the tattoo area.

22.6(8) Persons tattooed shall be provided with printed instructions regarding tattoo care during the healing process and shall be instructed to consult a physician if signs and symptoms of an infection develop.

ITEM 7. Rescind subrules 22.7(1) to 22.7(8) and insert the following new subrules 22.7(1) to 22.7(10) in lieu thereof:

641--22.7(135) Application for permit--fees.

22.7(1) A person shall not own, control and lease, act as an agent for, conduct, manage, or operate an establishment to practice the art of tattooing or engage in the practice of tattooing without first applying for and receiving a permit from the department.

22.7(2) No tattoo establishment shall be operated in the state without having a permit to operate issued by the department.

22.7(3) Each person acquiring or establishing a tattoo establishment shall apply for a permit prior to beginning operation.

22.7(4) Permits to operate will be issued to a new establishment when the establishment has successfully completed an on-site inspection.

22.7(5) Applications are available upon request from the Iowa Department of Public Health, Division of Health Protection, Tattoo Permit Program, Lucas State Office Building, Des Moines, Iowa 50319-0075.

22.7(6) An annual, nonrefundable application fee of $25, payable to the Iowa Department of Public Health, shall be remitted with the initial or renewal tattoo establishment application.

22.7(7) The annual fee for each tattoo artist permit shall be $40.

22.7(8) Tattoo artist permits and tattoo establishment permits are nontransferable.

22.7(9) All permits expire on December 31 of each year, regardless of date of issue. Permits shall be renewed annually upon acceptance of a renewal application provided by the department and receipt of renewal fee.

22.7(10) The owner of the tattoo establishment shall be billed $200 for each tattoo establishment inspection. Tattoo establishments shall be inspected annually. When the tattoo establishment is located within a contracted area of a board of health, the costs billed will be paid to the contracted board of health, or its designee.

ARC 7641A

Pursuant to the authority of Iowa Code sections 99E.10 and 135.11, the Department of Public Health hereby gives Notice of Intended Action to rescind Chapter 162, "Gambling Treatment Program," Iowa Administrative Code, and insert a new Chapter 162 with the same title.

These rules will replace the current rules which were Adopted and Filed Emergency to comply with legislation transferring the gambling treatment program on July 1, 1996, from the Department of Human Services to the Department of Public Health. Those emergency rules allowed the Department to continue the program and issue contracts to existing service providers.

These rules define and structure the Department of Public Health's Gambling Treatment Program. This program provides education, referral, and counseling services for persons affected by problem gambling behavior, including services for concerned persons. The program includes a gambling treatment toll-free helpline, research, and dissemination of problem gambling information to the public. The proposed rules eliminate outdated provisions and references. They do not propose substantial new requirements, but primarily clarify and update the operation of the gambling treatment program.

Any interested person may make written suggestions or comments on the proposed rules by 4:30 p.m. on November 25, 1997. Such written comments should be sent to Francis Biagioli, Iowa Gambling Treatment Program, Division of Substance Abuse and Health Promotion, Lucas State Office Building, Des Moines, Iowa 50319-0075; fax (515) 281-4535.

A public hearing will be conducted on November 25, 1997, at 10 a.m. in ICN Room 326 at the Lucas State Office Building, 321 East Twelfth Street, Des Moines, Iowa 50319, and on the Iowa Communications Network at the following sites:

Scott Community College, Room 210

500 Belmont Road

Bettendorf, Iowa 52722

Loess Hills Area Education Agency, ICN Room

East of Council Bluffs 6 miles on Hwy. 92

Council Bluffs, Iowa 51502

Dubuque Area Education Agency, ICN Classroom

2310 Chaney Road

Dubuque, Iowa 52001

Western Hills Area Education Agency, Room 209A

1520 Morningside Avenue

Sioux City, Iowa 51106

Persons may present their views at this hearing either orally or in writing.

These rules are intended to implement Iowa Code sections 99E.10 and 135.11.

The following amendment is proposed.

Rescind 641--Chapter 162 and adopt the following new chapter in lieu thereof:

"Applicant" means an incorporated agency, a licensed practitioner, an educational institution, or a unit of local government applying for grant funding.

"Billable unit" means one unit for one hour of face-to-face contact. A billable unit applies to individual, group, crisis, and education services related to problem gambling. Telephone contacts for the purpose of crisis intervention will be considered face-to-face contact. The unit rate includes all direct and indirect costs associated with providing the one hour of face-to-face contact, including costs of preparing for, conducting and documenting the contact. For the purpose of billing, the amount of time involved in face-to-face contact may be the exact hours spent in the face-to-face contact or may be rounded to the nearest quarter hour. The total of the contact time is billed to the department at an established hourly rate for each type of service.

"Concerned person" means a person affected by problem gambling behavior and needing services or a person willing to get involved in the treatment of a person who gambles excessively. The concerned person may be either a relative or nonrelative of the person who gambles excessively.

"Continuing care" means actions taken to address relapse issues and to support and increase the gains made in the treatment process.

"Department" means the Iowa department of public health.

"Director" means the director of the Iowa department of public health.

"Division director" means the director of the division of substance abuse and health promotion in the Iowa department of public health.

"Education" includes a broad array of education strategies for problem gambling presentations provided in a variety of settings for both the general population as well as groups which are at risk for developing problems with gambling.

"Problem gambling" means a pattern of gambling behavior, which may compromise, disrupt or damage family, personal or vocational pursuits. Problem gambling includes, but is not limited to, the diagnostic criteria for pathological gambling in the current American Psychiatric Association: Diagnostic and Statistical Manual of Mental Disorders. Problem gambling may be referred to as disordered gambling or excessive gambling.

"Provider" means an applicant organization which has been awarded a grant by the department.

"Public information" means the dissemination of information on problem gambling through print, electronic, and other means.

"Resident" means a person who is living in Iowa voluntarily with the intention of making that person's home there and not for a temporary purpose.

"Service area" means the territory or region of the state in which a provider has primary responsibility to cover and provide gambling treatment services.

641--162.2(99E) Availability of funds. In any year in which funds are available for gambling treatment services, the director shall award contracts to eligible providers to serve Iowa residents, including concerned persons, affected by problem gambling. In addition, the director may enter into contracts to provide training, to conduct research, and to promote education on problem gambling. The department shall administer the funds for this program contingent upon their availability. If the department lacks the funds necessary to fulfill its fiscal responsibility under this program, the contracts shall be renegotiated or terminated.

641--162.3(99E) Provider qualifications. Unless additional qualifications are listed elsewhere in this chapter, the provider shall be an incorporated agency, a licensed practitioner, an educational institution, or a unit of local government. The provider shall practice in Iowa under Iowa standards and the provider shall have applicable experience in providing gambling treatment services.

641--162.4(99E) Outpatient program.

162.4(1) Guidelines for outpatient program. An outpatient program shall be designed to provide a variety of diagnostic and primary gambling treatment services on both a scheduled (e.g., appointments) and an unscheduled (e.g., emergency, walk-in) basis in a nonresidential therapeutic setting. Hours of operation shall be during periods which make outpatient services accessible to clients and the general public. During hours when the program does not operate, the program's hours of operation shall be conspicuously displayed so as to communicate those hours to the generalpublic. The outpatient facility shall be safe, clean, well-ventilated, properly heated, and in good repair.

a. The facility shall be appropriate for providing services available from the program and for protecting client confidentiality.

b. The facility shall meet local building code standards.

c. Written reports of annual inspections by state or local fire safety officials shall be maintained with records of corrective action taken by the program.

d. There shall be a written plan outlining procedures to be followed in the event of fire or tornado. This plan shall be conspicuously displayed at the facility.

162.4(2) Client eligibility. A client, either a person gambling excessively or a concerned person affected by problem gambling behavior, shall be eligible for outpatient services if:

a. The person is a resident of Iowa.

b. The person has an assessment that identifies a need for gambling treatment services. A person is considered eligible while in assessment. An assessment shall be completed within five working days of initial contact or service initiation.

(1) An assessment with a client includes the use of any of the following tools:

1. The South Oaks Gambling Screen (SOGS).

2. The Gamblers Anonymous (GA) 20 Questions.

3. The diagnostic criteria for pathological gambling in the current American Psychiatric Association: Diagnostic and Statistical Manual of Mental Disorders.

A person gambling excessively will be determined in need of gambling treatment services if the person meets the criteria from any one of the three assessment tools above.

(2) A concerned person qualifies for gambling treatment services if any of the following apply:

1. The person gambling excessively, and whose behavior is affecting the concerned person, meets the criteria from any of the above three assessment tools.

2. The concerned person meets the criteria of the Gamanon 20 Questions.

162.4(3) Services.

a. Individual counseling services. Components include face-to-face individual counseling, continuing care, follow-up, and family counseling provided under these services. The purpose of the counseling session is to allow exploration of areas identified in the treatment plan related directly or indirectly to problem gambling. When members of a family receive services together in a setting, the members are to be considered as one participant for billing purposes as it applies to department billing.

b. Group counseling services. Group counseling services involve face-to-face contact activities in a group setting. The purpose of the counseling session is to allow a person to explore areas identified in the treatment plan related directly or indirectly to problem gambling. When more than one family receives services in a group setting, all members of each family participating in the group service activity are to be considered as one participant for billing purposes as it applies to department billing. Continuing care is an activity provided under these services.

c. Crisis services. Crisis services involve either a face-to-face meeting or a telephone contact where a counselor is responding to a crisis situation resulting from problem gambling behavior.

d. Education services. Education services are the activities that provide services and information about problem gambling and the availability of gambling treatment services. Education services include early intervention for at-risk populations as well as the general public.

162.4(4) Intake.

a. The provider shall have written policies and procedures governing a uniform intake, assessment, and evaluation process which defines:

(1) The types of information to be gathered on all persons upon admission.

(2) Procedures to be followed when accepting referrals from outside agencies or organizations.

(3) The types of records to be kept on all persons applying for services.

b. The following information shall be collected and recorded on standardized formats by the provider on all persons applying for services prior to or at the time of admission and shall become part of that person's case record:

(1) For those clients being assessed, include

1. Identifying information which includes name, address, telephone number.

2. Demographic information which includes date of birth, sex, race or ethnicity.

3. Sufficient identification of the referral source.

4. Presenting problem.

5. Gambling history which will include type, amount, frequency and duration of gambling activity.

6. Legal history which will describe any involvement with the criminal justice system.

7. Medical and health history.

8. Psychological history and mental status.

9. Any other relevant information which will assist in formulating an initial assessment of the client, in addition to the required assessment tools.

(2) For those clients assessed as needing treatment, the following are also required:

1. Family history which will describe the family composition and dynamics.

2. Education status and history which describe levels of achievement.

3. Vocational or employment status and history which will describe skills or trades learned; record of jobs held, duration, reasons for leaving.

4. Peers and friends which will describe interpersonal relationships and interaction with persons and groups outside of the home.

5. A financial evaluation and information which is to include insurance coverage.

c. Each new admission, readmission or transfer admission shall be interviewed by a treatment supervisor or designee and all clinical observations and recommendations shall be documented in the applicant's case record. If, in the judgment of the treatment supervisor, psychological, psychiatric or further medical examinations are indicated, this assistance shall be obtained and documented in the case record.

d. When a person refuses to divulge information or to follow the recommended course of treatment, this refusal shall be noted in the case record.

e. During the intake process, documentation shall be made that the person has been informed of:

(1) General nature and goals of the program.

(2) Rules governing client conduct and infractions that can lead to discharge from the program.

(3) The hours during which services are available.

(4) Treatment costs to be borne by the client, if any.

(5) Client's rights and responsibilities.

(6) Confidentiality laws, rules and regulations.

f. Sufficient information shall be collected during the intake process to allow for the development of a complete assessment of the client's status, which shall be an analysis and synthesis of the intake data and which addresses the client's strengths, needs, and areas of clinical concern.

g. The results of the intake shall be clearly explained to the client, and to the client's family when appropriate. This shall be documented in the client record.

162.4(5) Treatment plans. The provider shall have a treatment plan in effect for each client receiving services under the contract. Based upon the initial assessment, an individualized written treatment plan shall be developed and recorded in the client's case record.

a. A comprehensive treatment plan shall be developed as soon after the client's admission to the outpatient program as is clinically feasible, but no later than ten days following admission.

b. The individualized treatment plan shall minimally contain:

(1) A clear and concise statement of the client's current strengths and needs.

(2) Clear and concise statements of the short-term and long-term goals the client will be attempting to achieve.

(3) Type and frequency of therapeutic activities (services) in which the client will be participating.

(4) The staff persons to be responsible for the client's treatment.

(5) The specific criteria to be met for successful completion of treatment and an anticipated timetable.

c. Treatment plans shall be developed in partnership with the client. Treatment plans shall be reviewed by the primary counselor and the client every two months or as progress events occur, whichever is sooner. Treatment plans shall be reviewed by a treatment supervisor every two months or as progress events occur, whichever is sooner.

d. The reviews shall consist of a reassessment of the client's current status to include accomplishments and needs and a redefining of treatment goals when appropriate. The date of the review and any change, as well as the persons involved in the review, shall also be recorded.

e. The use of abstract terms, technical jargon, or slang should be avoided in the treatment plan, and the plan should be written in a manner readily understandable to the average client. The provider should provide the client with copies of all treatment plans upon request.

162.4(6) Progress notes. A client's progress and current status in meeting the goals set in the treatment plan, as well as efforts by staff members to help the client achieve these stated goals, shall be recorded in the client's case record. Information will be noted following each individual counseling session and a summary of group counseling services shall be documented at least weekly when a client receives group counseling services.

a. Entries shall be filed in chronological order and shall include the date services were provided or observations made, the amount of service time, the date the entry was made, the signature or initials and staff title of the individual providing the services. All progress notes shall be entered into the client's case record in permanent pen, or by typewriter or computer. In those instances where records are maintained electronically, a staff identification code number authorizing access shall be accepted in lieu of a signature.

b. All entries that involve subjective interpretations of a client's progress should be supplemented with a description of the actual behavioral observations which were the basis for the interpretation.

c. The use of abstract terms, technical jargon, or slang should be avoided in progress notes.

d. The provider shall develop a uniform progress note format to be used by all clinical staff.

e. If a client is receiving services from an outside resource, the provider shall attempt to secure a written copy of status reports and other client records from that resource.

162.4(7) Contract management. The department may monitor performance under the contract and provide or arrange for technical assistance to improve the provider's performance if needed. When department staff conduct an on-site monitoring review of the provider, the provider may request an exit briefing to discuss the findings of the review.

162.4(8) Conditions of participation. To participate in department funding, the provider shall meet the following conditions:

a. Licensure, approval, or accreditation. The provider shall have license, approval, and accreditation required by law, regulation or administrative rules before the contract can be effective.

b. Signed contract. The contractor shall have a current contract signed by a department representative and meet all contract requirements.

c. Client records. The provider shall maintain client rec-ords as specified in subrule 162.4(10).

d. Financial and statistical records. Each provider shall maintain sufficient financial and statistical records, including program data to document the validity of reports, provider invoices, claim vouchers and like documents submitted to the department.

e. Progress reports. The provider shall submit the gambling treatment program system (GTPS) forms to the department as required.

f. Provider charges. A provider shall not charge department clients more than it charges for the same services provided to nondepartmental clients.

g. Services provided. Services provided shall at a minimum meet the standards found in these rules or the contract may be terminated.

h. Fiscal management. The program shall ensure proper fiscal management which shall include the following:

(1) The preparation and maintenance of an annual written budget which shall be reviewed and approved by the governing body prior to the beginning of the budget year.

(2) The fiscal management system shall be maintained in accordance with generally accepted accounting principles, including internal controls to reasonably protect the provider assets.

(3) There shall be an insurance program that provides for the protection of the physical and financial resources of the program which provides coverage for all the people, buildings, and equipment. The insurance program shall be reviewed annually by the governing body.

i. Renegotiation clause. In the event there is a revision of laws or regulations, both parties will review the contract and renegotiate those items necessary to conform with the new laws or regulations.

j. Provider staff qualifications. The provider must have staff qualified to provide gambling treatment services, as specified in subrule 162.4(9).

k. Therapeutic environment. The provider shall establish an environment that enhances the positive self-image of clients and preserves their human dignity.

l. The provider shall have written referral policies and procedures which facilitate referrals between the provider and other service providers in such a manner as to ensure continuity of care and shall maintain a list of all appropriate resources available within the service area which shall include provision for legal, education and financial services.

162.4(9) Personnel and staff development. Written personnel and staff development policies and procedures shall be developed by the provider.

a. Staff, providing any billable units of gambling treatment service, must meet one of the following conditions:

(1) Is a nationally certified gambling counselor.

(2) Is a Certified Alcohol and Drug Counselor (CADC) or an Advanced Certified Alcohol and Drug Counselor (ACADC) and has received a minimum of 20 hours of training or education related to problem gambling within the previous 24 months.

(3) Is working toward certification within 12 months as a CADC and who has received a minimum of 30 hours of training or education related to problem gambling within the previous 24 months.

(4) Is a licensed or certified practitioner in a counseling-related field and has received a minimum of 20 hours of training or education related to problem gambling within the previous 24 months.

b. The staff development program shall include an orientation for entry-level staff, on-the-job training, in-service education, and opportunities for continuing job-related education. Initial training of each treatment staff member shall include, but not be limited to, an orientation to the program and community resources and counseling skill development. The staff development program shall take steps to ensure that staff members are kept informed of new developments in the field of gambling treatment. Staff development activities and participation in state training shall be planned and scheduled. Regional and national training offerings may also be included in the plan when they are available. These activities shall be documented in order to evaluate their scope, effectiveness, attendance, and amount of time spent on these efforts.

c. Provider staff qualifying under paragraph "a" above may provide billable units of services. Staff providing billable units of education services shall have received a minimum of 20 hours of gambling-specific training within the previous 24 months. This training may be provided through in-service education, department-sponsored training, or recognized gambling conferences.

162.4(10) Client case records. There shall be written policies and procedures governing the compilation, storage and dissemination of individual client case records.

a. These policies and procedures shall ensure that:

(1) The provider exercises its responsibility for safeguarding and protecting the client case record against loss, tampering, or unauthorized disclosure of information.

(2) Content and format of client records are kept uniform.

(3) Entries in the client case record are signed and dated.

b. The provider shall provide adequate physical facilities for the storage, processing, and handling of client case records. These facilities shall include suitably locked, secured rooms or file cabinets.

c. Appropriate records shall be readily accessible to those staff members providing services directly to the client and other persons specifically authorized by provider policy. Records should be kept in proximity to the area in which the client normally receives services.

d. There shall be a written policy governing the disposal and maintenance of client case records. Client case records shall be maintained in accordance with department requirements.

e. All client case records shall be marked "confidential," or bear a similar cautionary statement. Each file cabinet or storage area containing such client case records shall be locked and be conspicuously marked "confidential information," or bear a similar cautionary statement. All policies related to confidentiality shall apply even after an applicant or client has terminated active involvement with the provider.

f. The provider shall establish policies that specify the conditions under which information on applicants or clients may be released and the procedures to be followed for releasing the information. Even if a provider is not federally funded, all the policies and procedures shall be in accordance with federal confidentiality regulations issued, and state confidentiality laws and rules. Every authorization for release of information shall become part of the client's permanent case record. A client's written consent for the release of information shall be considered valid only if the following conditions have been met:

(1) The client is informed, in a manner that ensures understanding, of the specific type of information that has been requested, as well as the benefits and disadvantages of releasing the information, if known.

(2) The client is informed of the purpose or need for the information.

(3) Treatment services are not contingent upon the client's decision concerning authorization for the release of information.

(4) The client gives consent freely and voluntarily.

g. A client's written authorization shall appear on a consent form containing:

(1) The name of the provider which is to make the disclosure.

(2) The name or title of the person or organization to which disclosure is to be made.

(3) The name of the client.

(4) The purpose or need for the disclosure.

(5) The extent or nature of information to be disclosed.

(6) Except where the client is a mandatory criminal justice system referral, a statement that the consent is subject to revocation at any time, and date, event or condition upon which it will expire without express revocation.

h. Where participation by a person in a treatment program is made a condition of the person's release from confinement, the disposition or status of any criminal proceedings against the person, or the execution or suspension of any sentence imposed, the person may consent to unrestricted communication between any provider in which the person is enrolled in fulfillment of the above condition and:

(1) The court granting probation or other posttrial or retrial conditional release.

(2) The parole board or other authority granting parole.

(3) Probation or parole officers responsible for the person's supervision. In addition, where consent is given for disclosures in this manner, the consent shall expire 60 days after it is given or when there is substantial change in the person's status, whichever is later.

i. In a life-threatening situation, or where a person's condition or situation precludes the possibility of obtaining written consent, the provider may release pertinent medical information to the medical personnel responsible for the person's care without a client or applicant's authorization, if obtaining the authorization would cause an excessive delay in delivering treatment to the person.

j. When information has been released without the person's authorization under these standards, the staff member responsible for the release of information shall enter into the person's case record all details pertinent to the transaction, which shall include at least:

(1) The date the information was released.

(2) Persons to whom the information was released.

(3) The reason the information was released.

(4) The nature and details of the information given.

As soon as possible after the release of information, the client or applicant shall be informed that the information was released.

k. There shall be a case record for each client that contains:

(1) Results of all examinations, tests, and intake and assessment information.

(2) Reports from referring sources.

(3) Treatment plans.

(4) Reports from outside resources, which shall include the name of the resource and the date of the report. These reports shall be signed by the person making the report or by the program staff member receiving the report.

(5) Multidisciplinary case conference and consultation notes, including the date of the conference or consultation, recommendations made, and actions taken.

(6) Correspondence related to the client, including all letters and dated notations of telephone conversations relevant to the client's treatment.

(7) Information release forms.

(8) Progress notes. Entries shall be filed in chronological order and shall include the date any relevant observations were made, the date the entry was made, and the signature and staff title of the person rendering service.

(9) Records of services provided. Summaries of services provided shall be sufficiently detailed to identify the types of services the client has received and action taken to address specific problems identified. General terms such as "counseling" or "activities" shall be avoided in describing services.

(10) Continuing care plans, which shall be designed to support and increase the gains made to date in the treatment process, shall use, whenever appropriate, existing community resources for support services during the continuing care period. The delivery of continuing care services shall be based upon an individualized continuing care plan. Continuing care plans shall be developed in partnership with the client.

(11) Discharge summary.

(12) Follow-up information.

(13) Statistical forms. The gambling treatment program system (GTPS) forms shall be completed on each client, maintained as part of the client file, and sent to the department as required.

162.4(11) General safety. The provider shall maintain facility grounds in a manner that will provide safe access to and a safe environment for clients, personnel, and visitors and have adequate space for the program to carry out its stated goals. The provider shall have written policies and procedures to provide a safe environment for clients, personnel, and visitors and to monitor that environment. The written policies and procedures shall include, but not be limited to, the following:

a. The process for the identification, development, implementation, and review of safety policies and procedures for all departments or services.

b. The promotion and maintenance of an ongoing,facilitywide hazard surveillance program to detect and report all safety hazards related to clients, visitors, and personnel.

162.4(12) Outpatient fees. The client is responsible for paying the costs of individual and group counseling services provided in an outpatient program. Charges to the client by the provider shall be based on a sliding fee schedule which has been developed based on department guidelines. The provider shall maintain a record of fees collected, and these records shall be available for audit by the department or its representative. Subject to the availability of appropriated or designated funds, the director may enter into written agreements with a facility to pay for the cost of treatment of a client unable to pay. If the client has any claim for reimbursement under an indemnification contract, by insurance or otherwise, the client shall assign that claim to the department. The department may allocate any recovered funds to the provider for services specifically approved by the department.

641--162.5(99E) Helpline program. The helpline program provides for statewide 24-hour telephone information and referral. The program maintains a directory of services for persons who gamble excessively and for concerned persons.

162.5(1) Conditions of participation. The provider shall meet the following standards to participate in the helpline program:

a. Licensure, approval, or accreditation. The provider shall have any license, approval, and accreditation required by law, regulation or administrative rules before the contract can be effective.

b. Signed contract. The contractor shall have a current contract signed by a department representative and meet all contract requirements.

c. Financial and statistical records. The provider shall maintain sufficient financial and statistical records, including program and census data, to document the validity of reports, provider invoices, claim vouchers and like documents submitted to the department.

(1) The records shall be available for review at any time during normal business hours by department personnel.

(2) These records shall be retained for a period of three years after the organization's independent audit is complete.

d. Helpline reports. The contractor shall complete and forward to the department helpline data forms, no later than ten days following the end of the report month. Failure to submit reports within the specified time limits is grounds for termination of the contract.

e. Staff qualifications. Staff shall have received a minimum of 20 hours of gambling-specific training within the previous 24 months. This training may be provided through in-service education, department-sponsored training, or recognized gambling conferences.

f. The helpline program provider shall be independent of the providers contracting with the department to provide gambling treatment services.

g. The provider shall be committed to answering calls quickly and efficiently 24 hours a day.

162.5(2) Contract management. The department may monitor performance under the contract and provide or arrange for technical assistance to improve the provider's performance if needed. When department staff conduct a review of the provider, the provider may request an exit briefing to discuss the findings of the review.

These rules are intended to implement Iowa Code section 99E.10.

ARC 7631A

Pursuant to the authority of Iowa Code section 543D.5, the Iowa Real Estate Appraiser Examining Board hereby gives Notice of Intended Action to amend Chapter 3, "Examinations--Certified Licensed and Associate Real Property Appraisers," and Chapter 4, "Registration--Certificates, Licenses and Associates," and to rescind Chapter 6, "Continuing Education," and adopt new Chapter 6 with the same title, Iowa Administrative Code.

Item 1 amends subrule 3.3(1), paragraph "a," which sets forth the requirement that 180 classroom hours of courses be completed to qualify for the certified general real property appraiser examination.

Items 2 and 3 amend subrules 4.3(2) and 4.3(4) which set forth requirements that the applicants for certified general and residential real property appraiser certificates shall accumulate an increased number of hours of experience for the issuance of a certificate.

Item 4 rescinds existing Chapter 6 and proposes new Chapter 6 setting forth the requirements for preapproving continuing education required to renew an appraisal certificate.

Any interested person may make written suggestions or comments on these proposed amendments prior to 4:30 p.m. on November 25, 1997. Such comments or written material should be directed to William Schroeder, Executive Secretary, Iowa Real Estate Appraiser Examining Board, 1918 S.E. Hulsizer, Ankeny, Iowa 50021.

These amendments are intended to implement Iowa Code chapters 272C and 543D.

The following amendments are proposed.

ITEM 1. Amend subrule 3.3(1), paragraph "a," introductory paragraph, as follows:

a. Completion of 165 180 classroom hours of courses in subjects related to and including 15 hours of tested USPAP and all topics listed below with particular emphasis on the appraisal of nonresidential properties:

ITEM 2. Amend subrule 4.3(2) as follows:

4.3(2) The applicant for the general real property appraiser certificate shall accumulate a total of 2000 3000 hours of appraisal experience of which at least 50 percent, 1000 1500 hours, shall be in nonresidential appraisal work. A minimum of two calendar years 30 months is required to obtain the experience.

ITEM 3. Amend subrule 4.3(4) as follows:

4.3(4) The applicant for the residential real property appraiser certificate shall accumulate a total of 2000 2500 hours of appraisal experience. A minimum of two calendar years 24 months is required to obtain the experience.

ITEM 4. Rescind 193F--Chapter 6 and adopt in lieu thereof the following new chapter:

"Approved program" means a continuing education program, course, or activity which satisfies the standards set forth in these rules and has received advanced approval of the board pursuant to these rules.

"Approved provider" means a person or an organization that has been approved by the board to conduct continuing education programs pursuant to these rules.

"Board" means the Iowa real estate appraiser examining board.

"Certificate holder" means any person holding an Iowa real estate appraiser certificate.

"Continuing education" means education which is obtained by a person licensed or certified to practice real estate appraising in order to maintain, improve, or expand skills and knowledge obtained prior to initial licensure or certification, or to develop new and relevant skills and knowledge, all as a condition of certification renewal.

"Credit hour" means the value assigned by the board to a continuing education program.

"Guest speaker" means an individual who teaches an appraisal education program on a one-time-only or very limited basis and who possesses a unique depth of knowledge and experience in the subject matter.

"Home-study/correspondence program" means acomputer-generated program, such as CD-ROM, or written materials or exercises intended for self-study, which does not include simultaneous interaction with an instructor but does include tests transmitted to the provider for review and grading.

"Hour" means 50 minutes of instruction.

"Live instruction" means an educational program delivered in a classroom setting or through ICN whereby the instructor and student carry out their essential tasks while together.

193F--6.2(272C,543D) Continuing education requirements. Certified, licensed and associate real estate appraisers must demonstrate compliance with the following continuing education rules as a condition of biennial renewal.

6.2(1) As a condition of biennial renewal, certified, licensed and associate real estate appraisers must demonstrate compliance with all of the following requirements:

a. A minimum of 28 credit hours in approved continuing education programs acquired during the two-year renewal period. Carryover hours from a previous renewal period are not allowed.

b. A minimum of 14 of the required 28 credit hours must directly involve one or more of the following topics: real estate appraisal law and rules, report writing, cost approach, sales approach, income approach and USPAP.

c. A minimum of 3 of the required 28 credit hours must involve USPAP.

6.2(2) A maximum of 14 of the required 28 credit hours may be acquired in approved home-study/correspondence programs.

6.2(3) A maximum of 14 of the required 28 credit hours may be claimed by an instructor for teaching one or more approved continuing education programs in an amount equal to the credit hours approved for attendees. Instructors may only seek credit hours once for each separate program.

6.2(4) A maximum of 7 of the required 28 credit hours may be claimed for published articles and books, provided the board determines such activity has contributed to the professional competence of the applicant.

6.2(5) Applicants seeking to renew an initial certificate or license issued less than two years but more than one year prior to renewal must demonstrate completion of at least 14 credit hours, including at least 3 credit hours of USPAP.

6.2(6) Applicants who have allowed their certificates or licenses to lapse shall make the same showing as prescribed in subrule 6.2(1).

6.2(7) During each two-year renewal period, a continuing education program may be taken for credit only once. A program may be repeated for credit only if the program numbers and instructors are different.

6.2(8) Successful completion of a continuing education program requires full-time attendance. Continuing education credits shall not be granted to attendees who arrive late, leave early, or leave during the program.

6.2(9) Applicants may claim continuing education credits earned in a state which has a continuing education requirement for renewal of a real estate appraisal certificate or license if the program is approved by the appraisal certification board of that state or the appraisal foundation for continuing education purposes. All other programs must be approved upon application to the board pursuant to rules 6.6(272C,543D), 6.8(272C,543D) and 6.9(272C,543D).

6.2(10) A person licensed or certified to practice real estate appraising in Iowa shall be deemed to have complied with Iowa's continuing education requirements during periods that the person serves honorably on active duty in the military service, or for periods that the person is a resident of another state or district having continuing education requirements for real estate appraising and meets all requirements of that state or district, or for periods that the person is a government employee working in real estate appraising and assigned to duty outside the United States.

193F--6.3(272C,543D) Hardship and disability provisions.

6.3(1) The board may, in individual cases involving undue hardship caused by reasons including, but not limited to, illness, disability, or retirement, grant waivers, modifications or extensions of time within which to fulfill the continuing education requirements in rule 6.2(272C,543D). No waiver or extension of time shall be granted except upon written application to the board specifying and verifying the grounds of the request and attaching confirmation by an attending physician where applicable. The board may, as a condition of granting a waiver or extension of time, require the applicant to make up all or a certain portion of the minimum requirements by such methods or on such terms as the board may prescribe.

6.3(2) An applicant seeking a waiver, modification, extension of time or other form of reasonable accommodation due to a disability, as defined in the Americans with Disabilities Act, must include an attending physician's verification of the disability and a detailed description of the type of accommodation requested.

193F--6.4(272C,543D) Minimum program qualifications.

6.4(1) Continuing education programs, as a condition of board approval, must provide a formal program of learning which contributes to the growth in the professional knowledge and professional competence of real estate appraisers.

6.4(2) Programs dealing with the following subject areas will generally be acceptable:

a. Ad valorem taxation;

b. Agriculture production and economics;

c. Agronomy/soil;

d. Arbitrations;

e. Business courses related to the practice of real estate appraisal;

f. Construction estimating;

g. Cost approach;

h. Ethics and standards of professional practice;

i. Income approach;

j. Land use planning, zoning and taxation;

k. Litigation;

l. Management, leasing, brokerage time-sharing;

m. Property development;

n. Real estate appraisal law and rules;

o. Real estate appraisal (valuations/evaluations);

p. Real estate law;

q. Real estate financing and investment;

r. Real estate appraisal-related computer applications;

s. Real estate securities and syndication;

t. Real property exchange;

u. Production economics;

v. Sales approach;

w. USPAP.

6.4(3) The following programs will not be acceptable:

a. Courses of instruction designed to prepare a student for passing the real estate appraisal certification examination.

b. Programs in mechanical office and business or managerial skills, such as typing, speed-reading, and key punch.

c. Sales promotion or other meetings held in conjunction with the appraiser's general business.

d. Time devoted to breakfast, lunch or dinner.

e. A program certified by the use of a challenge examination. The required number of hours must be completed to receive credit hours.

f. Meetings which are a normal part of the in-house staff or employee training.

g. Home-study/correspondence programs which are not tested and successfully completed.

h. Programs which do not provide at least three credit hours.

6.4(4) Continuing education credit will only be granted for whole hours, with a minimum of 50 minutes constituting one hour. For example, 100 minutes of continuous instruction would count as two credit hours; however, more than 50 minutes but less than 100 minutes of continuous instruction would only count as one hour.

6.4(5) Continuing education credit may be approved for university or college courses in qualifying topics according to the following formula: Each semester hour of credit shall equal 15 credit hours and each quarter hour of credit shall equal 10 credit hours.

193F--6.5(272C,543D) Standards for provider and program approval. Providers and programs must satisfy the following minimum standards in order to be preapproved in accordance with the procedures established in rule 6.6(272C,543D), and in order to maintain approval status.

6.5(1) The program must meet the minimum qualifications described in rule 6.4(272C,543D).

6.5(2) The program must be taught or developed by individuals who have the education, training and experience to be considered experts in the subject matter of the program and competent in the use of teaching methods appropriate to the program.

6.5(3) Live instruction programs must be taught by instructors who have successfully completed an instructor development workshop within 24 months preceding board approval of the program.

6.5(4) In determining whether an instructor is qualified to teach a particular program, the board will consider whether the instructor has an ability to teach and an in-depth knowledge of the subject matter.

6.5(5) An instructor's ability to teach may be shown by meeting one or more of the following criteria:

a. A bachelor's degree or higher in education from an accredited college (attach a copy of transcripts), or

b. A current teaching credential or certificate in any field (attach copy), or

c. A certificate of completion from an instructor institute, workshop or school that is sponsored by a member of the appraisal foundation in the area of instruction (detail specific teaching experiences), or

d. A full-time current appointment to the faculty of an accredited college, or

e. Other, as the board may determine.

6.5(6) An instructor's in-depth knowledge of the program's subject matter may be shown by meeting one or more of the following criteria:

a. A bachelor's degree or higher from an accredited college with a major in a field of study directly related to the subject matter of the course the instructor proposes to teach; such as business, economics, accounting, real estate or finance (attach copy of transcript), or

b. A bachelor's degree or higher from an accredited college and five years of appraisal experience related to the subject matter of the course the instructor proposes to teach (attach copy of transcript and document how the instructor's experience is related to the subject matter the instructor proposes to teach), or

c. A qualified professional with a generally recognized professional real property appraisal designation or sponsor member of the appraisal foundation, or

d. Other, as the board may determine.

6.5(7) Course content and materials must be accurate, consistent with currently accepted standards relating to the program's subject matter and updated no later than 30 days after the effective date of a change in standards, laws or rules.

6.5(8) Programs must have an appropriate means of written evaluation by participants. Evaluations shall include the relevance of the materials, effectiveness of presentation, content, facilities, and such additional features as are appropriate to the nature of the program.

6.5(9) Programs shall not be used to advertise or solicit orally or in writing any product or service.

6.5(10) Providers must clearly inform prospective participants of the number of credit hours preapproved by the board for each program, and all applicable policies concerning registration, payment, refunds, attendance requirements and examination grading.

6.5(11) Procedures must be in place to monitor whether the person receiving credit hours is the person who attended or completed the program.

6.5(12) Providers must be accessible to students during normal business hours to answer questions and provide assistance as necessary.

6.5(13) Providers must comply with or demonstrate exemption from the provisions of Iowa Code sections 714.14 to 714.25.

6.5(14) Providers must designate a coordinator in responsible charge of each program who will act as the board's contact on all compliance issues.

6.5(15) Programs shall not offer more than eight credit hours in a single day.

6.5(16) Providers shall not provide any information to the board, the public or prospective students which is misleading in nature. For example, providers may not refer to themselves as a "college" or "university" unless qualified as such under Iowa law.

6.5(17) Providers must establish and maintain for a period of five years complete and detailed records on the programs successfully attended by each Iowa participant.

6.5(18) Providers must issue an individual certificate of attendance to each participant upon successful completion of the program. The certificate must be no larger than 8 1/2" _ 11" and must include the provider name and number, program name and number, name of attendee, date program was completed, number of approved credit hours, and the signature of the coordinator or other person authorized by the board.

6.5(19) Program providers and instructors are solely responsible for the accuracy of all program materials, instruction and examinations. Board approval of a provider or program is not an assurance or warranty of accuracy and shall not be explicitly or implicitly marketed or advertised as such.

193F--6.6(272C,543D) Applications for approval of providers and programs. Applications for approval of providers and programs must be submitted on forms prescribed by the board. Board approval is effective for 24 months, including the month of approval.

6.6(1) Approval must be obtained for each program separately.

6.6(2) A nonrefundable fee of $50 must be submitted for each program.

6.6(3) All required forms and attachments must be submitted for approval at least 45 days prior to the first offering of each program. The board will approve or deny each program, in whole or part, within 21 days of the date it receives the fee and fully completed application.

6.6(4) Application forms will request information including, but not limited to, the following:

a. Program description;

b. Program purpose;

c. Difficulty level;

d. Learning objectives for each major topic that specify the level of knowledge or competency the student should demonstrate upon completing the program;

e. Description of the instructional methods utilized to accomplish the learning objective;

f. Identifying information for all guest speakers or instructors and such documentation as is necessary to verify compliance with the instructor qualifications described in rule 6.5(272C,543D);

g. Copies of all instructor and student program materials;

h. Copies of all examinations and a description of all grading procedures;

i. A description of the diagnostic assessment method(s) used when examinations are not given;

j. Copies of prospective brochures or narrative descriptions of the program as will be advertised to prospective students;

k. Such information as needed to verify compliance with board rules;

l. The name, address, telephone number, fax number and E-mail address for the program's coordinator; and

m. Such other information as the board deems reasonably needed for informed decision making.

6.6(5) The board shall assign each provider and program a number. This number shall be placed on all correspondence with the board, all subsequent applications by the same provider, and all certificates of attendance issued to participants.

193F--6.7(272C,543D) Waiver of application fees. Application fees may be waived for approved programs sponsored by a federal, state, or local governmental agency, when the program is offered at no cost or at a nominal cost to participants. A request for waiver of application fees should be made by the provider or certificate holder at the time the application is filed with the board.

193F--6.8(272C,543D) Continuing education committee. Upon majority vote of the board, the board chair will appoint, on an annual basis, a continuing education committee to approve or deny, in whole or part, applications for provider and program approval, hardship and disability applications, pursuant to rule 6.3(272C,543D), and credits claimed by appraisers on certification renewal forms. The committee shall be comprised of three members of the board, at least two of whom are professional board members.

193F--6.9(272C,543D) Certificate holder requests for preapproval of continuing education programs. A certificate holder seeking credit for attendance and participation in a program which is to be conducted by a provider not accredited or otherwise approved by the board shall apply for approval to the board at least 60 days in advance of the commencement of the activity. The board shall approve or deny the application in writing within 21 days of receipt of the application. Application for prior approval of a continuing education activity shall include the following fee and information:

1. Application fee of $100.

2. School, firm, organization or person conducting the program.

3. Location of the program.

4. Title of activity and description of program.

5. Credit hours requested for approval.

6. Date of program.

7. Principal instructor(s).

193F--6.10(272C,543D) Certificate holder requests for postapproval of continuing education programs. A certificate holder seeking credit for attendance and participation in a program which was not conducted by an approved provider or otherwise approved by the board shall submit to the board a request for credit for the program. Within 30 days after receipt of the request, the board shall advise the certificate holder in writing whether the program is approved and the number of hours allowed therefor. A certificate holder not complying with the requirement of this rule may be denied credit for the program. Application for postapproval of a continuing education program shall include the following fee and information:

1. Application fee of $100.

2. School, firm, organization or person conducting the program.

3. Location of the program.

4. Title of program and description of program.

5. Credit hours requested for approval.

6. Dates of program.

7. Principal instructor(s).

8. Verification of attendance.

193F--6.11(272C,543D) Review of provider or program. The board on its own motion or upon receipt of a complaint or negative evaluation may monitor or review any approved program or provider, and upon evidence of significant variation in the program presented from the program approved, a violation of board rules, or material misstatement or omission in the application form, may withdraw approval of the provider or program and disallow all or any part of the approved hours granted to the program. The provider, as a condition of approval, agrees to allow the board or its authorized representatives to monitor ongoing compliance with board rules, through means including, but not limited to, unannounced attendance at programs.

193F--6.12(272C,543D) Hearings. In the event of denial, in whole or in part, of any application for approval of a continuing education program or provider or credit for a continuing education program or withdrawal of approval of a continuing education program or provider, the applicant, provider or licensee shall have the right, within 20 days after the sending of the notification of the denial or withdrawal by ordinary mail, to request, in writing, a hearing which shall be held within 60 days after receipt of the written request for hearing. The hearing shall be conducted by the board, a panel of the board, or a qualified administrative law judge designated by the board. If the hearing is conducted by a panel of the board or an administrative law judge, a transcript of the hearing shall be presented to the board with the proposed decision. The decision of the board, or the decision of the panel of the board or an administrative law judge after adoption or amendment by the board, shall be final.

ARC 7627A

Pursuant to the authority of Iowa Code section 262.9(3), the Board of Regents hereby gives Notice of Intended Action to amend Chapter 1, "Admission Rules Common to the Three State Universities," Iowa Administrative Code.

The proposed amendment will allow the Regent universities to assess Iowa resident tuition and fees to American Indian students who maintain a cultural identification with one or more of the tribes or nations historically connected with the present state of Iowa.

Any interested person may make written suggestions or comments on this proposed amendment on or before November 26, 1997. Such written materials should be directed to R. Wayne Richey, Executive Director, State Board of Regents, Old Historical Building, East Twelfth and Grand, Des Moines, Iowa 50319-0071; fax (515)281-6420.

An opportunity for oral presentations will be provided on November 26, 1997, at 2 p.m. in the Board of Regents Conference Room, First Floor West, Old Historical Building, Des Moines, Iowa.

This amendment is intended to implement Iowa Code section 262.9(3).

The following amendment is proposed.

Amend subrule 1.4(2) by adding new paragraph "i."

i. At the regent institutions, American Indians who have origins in any of the original people of North America and who maintain a cultural identification through tribal affiliation or community recognition with one or more of the tribes or nations connected historically with the present state of Iowa, including the Iowa, Kickapoo, Menominee, Miami, Missouri, Ojibwa (Chippewa), Omaha, Otoe, Ottawa (Odawa), Potawatomi, Sac and Fox (Sauk, Meskwaki), Sioux, and Winnebago (Ho Chunk), will be assessed Iowa resident tuition and fees.

ARC 7626A

Pursuant to the authority of Iowa Code section 262.9, the Board of Regents hereby gives Notice of Intended Action to amend Chapter 3, "Personnel Administration," Iowa Administrative Code.

Item 1 amends subrule 3.39(5) to reflect changes that were previously made in other parts of the rules.

Item 2 alters language to reflect changes made in the 1997-1999 AFSCME labor agreement.

Any interested person may make written suggestions or comments on the proposed amendments on or before November 26, 1997. Such written materials should be directed to R. Wayne Richey, Executive Director, State Board of Regents, Old Historical Building, East Twelfth and Grand, Des Moines, Iowa 50319-0071; fax (515)281-6420.

An opportunity for oral presentations will be provided on November 26, 1997, at 2 p.m. in the Board of Regents Conference Room, First Floor West, Old Historical Building, Des Moines, Iowa.

These amendments are intended to implement Iowa Code sections 19A.9 and 262.9.

The following amendments are proposed.

ITEM 1. Amend subrule 3.39(5), introductory paragraph, as follows:

3.39(5) Pay on reinstatement, reemployment or return from leave. An employee who is reinstated to the previously occupied class or a class in the same pay grade as the previously occupied class will be paid at a rate no less than what the employee was last paid and no higher than that provided at the step of the pay grade at which the employee was last paid with the prior approval of the resident director. An employee who is reinstated to a lower class, or who is returned to a merit system position from a professional position, will be paid in accordance with subrule 3.39(4), pay on demotion. The date of reinstatement will be the merit review date.

ITEM 2. Amend subrule 3.39(16) as follows:

3.39(16) Payment of a shift differential. All employees will be paid a shift differential of $0.25 per hour for any shift of which four or more hours occur between 6 p.m. and midnight and a shift differential of $0.30 per hour for any shift of which four or more hours occur between midnight and 6 a.m. The amount of the shift differential paid shall be determined by the merit system director.

ARC 7625A

Pursuant to the authority of Iowa Code section 262.9, the Board of Regents hereby gives Notice of Intended Action to amend Chapter 8, "Purchasing," Iowa Administrative Code.

This amendment removes the requirement that the Board of Regents use a roll call vote in granting its consent to vendors with a potential conflict of interest.

Any interested person may make written suggestions or comments on these proposed amendments on or before November 26, 1997. Such written materials should be directed to R. Wayne Richey, Executive Director, State Board of Regents, Old Historical Building, East Twelfth and Grand, Des Moines, Iowa 50319-0071; fax (515)281-6420.

An opportunity for oral presentations will be provided on November 26, 1997, at 2 p.m. in the Board of Regents Conference Room, First Floor West, Old Historical Building, Des Moines, Iowa.

This amendment is intended to implement Iowa Code sections 68B.4 and 262.9.

The following amendment is proposed.

Amend subrule 8.9(1), paragraph "a," as follows:

a. The board of regents, on a roll call vote, must give its consent. The individual who wishes to sell goods or services must not participate in giving that consent. Further, the individual will be precluded from participating not only in the initial decision to purchase and to authorize, but also in all subsequent approvals which might include payment vouchers, contract amendments, or any substantive changes to such agreements.

ARC 7635A

Pursuant to the authority of Iowa Code section 421.14, the Iowa Department of Revenue and Finance hereby gives Notice of Intended Action to amend Chapter 10, "Interest, Penalty, Exceptions to Penalty, and Jeopardy Assessments," Iowa Administrative Code.

Iowa Code section 421.7 requires the Director of Revenue and Finance to determine the interest rate for each calendar year. The Director has determined that the rate of interest on interest-bearing taxes arising under Iowa Code Title XVI shall be 10 percent for the calendar year 1998. The interest rate is 2 percent above the average prime rate charged by banks on short-term business loans as published in the Federal Reserve Bulletin for the 12-month period ending September 30, 1997. For the past 12 months the average prime rate was 8 percent.

The 10 percent annual rate is equivalent to an interest rate of .08 percent per month on all outstanding taxes. The rate will be applied to all taxes owing or becoming payable on or after January 1, 1998. Under Iowa law, each fraction of a month is considered a whole month when interest is computed. When required to pay interest on taxpayer's refunds, the Department will also pay interest at the 10 percent rate on refunds owing or becoming payable on or after January 1, 1998.

The proposed amendment will not necessitate additional expenditures by political subdivisions or agencies and entities which contract with political subdivisions.

The Department has determined that this proposed amendment may have an impact on small business. The Department has considered the factors listed in Iowa Code section 17A.31(4). The Department will issue a regulatory flexibility analysis as provided in Iowa Code sections 17A.31 to 17A.33 if a written request is filed by delivery or by mailing postmarked no later than November 25, 1997, to the Policy Section, Compliance Division, Iowa Department of Revenue and Finance, Hoover State Office Building, P.O. Box 10457, Des Moines, Iowa 50306. The request may be made by the Administrative Rules Review Committee, the Governor, a political subdivision, at least 25 persons who qualify as a small business under Iowa Code sections 17A.31 to 17A.33, or an organization of small businesses representing at least 25 persons which is registered with this agency under Iowa Code sections 17A.31 to 17A.33.

Any interested person may make written suggestions or comments on this proposed amendment on or before December 5, 1997. Such written comments should be directed to the Policy Section, Compliance Division, Iowa Department of Revenue and Finance, Hoover State Office Building, P.O. Box 10457, Des Moines, Iowa 50306.

Persons who want to orally convey their views should contact the Policy Section, Compliance Division, Iowa Department of Revenue and Finance, at (515)281-4250 or at the Department of Revenue and Finance offices on the fourth floor of the Hoover State Office Building.

Requests for a public hearing must be received by November 28, 1997.

This amendment is intended to implement Iowa Code section 421.7.

The following amendment is proposed.

Amend rule 701--10.2(421) by adding the following new subrule:

10.2(17) Calendar year 1998. The interest rate upon all unpaid taxes which are due as of January 1, 1998, will be10 percent per annum (0.8% per month). This interest rate will accrue on taxes which are due and unpaid as of, or after,January 1, 1998. In addition, this interest rate will accrue on tax refunds which by law accrue interest, regardless of whether the tax to be refunded is due before or after January 1, 1998. This interest rate of 10 percent per annum, whether for unpaid taxes or tax refunds, will commence to accrue in 1998.

ARC 7636A

Pursuant to the authority of Iowa Code section 421.17, the Iowa Department of Revenue and Finance hereby gives Notice of Intended Action to amend Chapter 11, "Administration," Chapter 38, "Administration," Chapter 41, "Determination of Taxable Income," Chapter 51, "Adminis- tration," Chapter 57, "Administration," Chapter 67, "Administration," Chapter 81, "Administration," Chapter 86, "Inheritance Tax," Chapter 89, "Fiduciary Income Tax," and Chapter 103, "Hotel and Motel--Administration," Iowa Administrative Code.

The purpose of these amendments is to adopt the "Model Recordkeeping and Retention Regulation" report promulgated by the Federation of Tax Administrators' Steering Committee Task Force on EDI Audit and Legal Issues for Tax Administration (March 1996).

The proposed amendments will not necessitate additional expenditures by political subdivisions or agencies and entities which contract with political subdivisions.

The Department has determined that these proposed amendments may have an impact on small business. The Department has considered the factors listed in Iowa Code section 17A.31(4). The Department will issue a regulatory flexibility analysis as provided in Iowa Code sections 17A.31 to 17A.33 if a written request is filed by delivery or by mailing postmarked no later than November 25, 1997, to the Policy Section, Compliance Division, Iowa Department of Revenue and Finance, Hoover State Office Building, P.O. Box 10457, Des Moines, Iowa 50306. The request may be made by the Administrative Rules Review Committee, the Governor, a political subdivision, at least 25 persons who qualify as a small business under Iowa Code sections 17A.31 to 17A.33, or an organization of small businesses representing at least 25 persons which is registered with this agency under Iowa Code sections 17A.31 to 17A.33.

Any interested person may make written suggestions or comments on these proposed amendments on or before December 5, 1997. Such written comments should be directed to the Policy Section, Compliance Division, Iowa Department of Revenue and Finance, Hoover State Office Building, P.O. Box 10457, Des Moines, Iowa 50306.

Persons who want to orally convey their views should contact the Policy Section, Compliance Division, Iowa Department of Revenue and Finance, at (515)281-4250 or at the Department of Revenue and Finance offices on the fourth floor of the Hoover State Office Building.

Requests for a public hearing must be received by November 28, 1997.

These amendments are intended to implement the "Model Recordkeeping and Retention Regulation" report as promulgated by the Federation of Tax Administrators' Steering Committee Task Force on EDI Audit and Legal Issues for Tax Administration (March 1996).

The following amendments are proposed.

ITEM 1. Amend rule 701--11.4(422,423) by adding the following new subrule 11.4(4) and renumbering existing subrule 11.4(4) as 11.4(5):

11.4(4) Electronic data interchange or EDI technology. The purpose of this subrule is to adopt the "Model Recordkeeping and Retention Regulation" report as promulgated by the Federation of Tax Administrators' Steering Committee Task Force on EDI Audit and Legal Issues for Tax Administration (March 1996). This subrule defines the requirements imposed on taxpayers for the maintenance and retention of books, records, and other sources of information under Iowa Code sections 422.50, 422A.1, and 423.21. It is also the purpose of this subrule to address these requirements where all or part of the taxpayer's records are received, created, maintained, or generated through various computer, electronic, and imaging processes and systems. A taxpayer must maintain all records that are necessary for determination of the correct tax liability as set forth in this subrule and the other subrules within rule 701--11.4(422,423). All required rec-ords must be made available on request by the department or its authorized representatives as provided in Iowa Code sections 422.50 and 423.21. If a taxpayer retains records required to be retained under this subrule in both machine-sensible and hard-copy formats, the taxpayer must make the records available to the department in machine-sensible format upon request of the department. Nothing in this subrule will be construed to prohibit a taxpayer from demonstrating tax compliance with traditional hard-copy documents or reproductions thereof, in whole or in part, whether or not the taxpayer also has retained or has the capability to retain rec-ords on electronic or other storage media in accordance with this subrule. However, as previously stated, this will not relieve a taxpayer of the obligation to comply with making rec-ords available to the department.

a. Definitions. The following definitions are applicable to this subrule:

"Database management system" means a software system that controls, relates, retrieves, and provides accessibility to data stored in a database.

"Electronic data interchange" or "EDI technology" means the computer-to-computer exchange of business transactions in a standardized, structured electronic format.

"Hard copy" means any documents, records, reports, or other data printed on paper.

"Machine-sensible record" means a collection of related information in an electronic format. Machine-sensible rec-ords do not include hard-copy records that are created or recorded on paper or stored in or by an imaging system such as microfilm, microfiche, or storage-only imaging systems.

"Storage-only imaging system" means a system of computer hardware and software that provides for the storage, retention, and retrieval of documents originally created on paper. It does not include any system, or part of a system, that manipulates or processes any information or data contained on the document in any manner other than to reproduce the document in hard copy or as an optical image.

"Taxpayer" as used in this subrule means any person, business, corporation, fiduciary, or other entity that is required to file a return with the department of revenue and finance.

b. Record-keeping requirements--machine-sensiblerecords. A taxpayer that maintains and retains books, records, and other sources of information in the form ofmachine-sensible records must comply with the following:

(1) General requirements. A taxpayer must comply with the following general requirements regarding the retention of machine-sensible records:

1. Machine-sensible records used to establish tax compliance must contain sufficient transaction-level detail information so that the details underlying the machine-sensiblerecords can be identified and made available to the department upon request. A taxpayer has discretion to discard duplicated records and redundant information provided its responsibilities under this regulation are met.

2. At the time of an examination, the retained records must be capable of being retrieved and converted to a standard record format.

3. Taxpayers are not required to construct machine-sensible records other than those created in the ordinary course of business. A taxpayer who does not create the electronic equivalent of a traditional paper document in the ordinary course of business is not required to construct a traditional paper document for tax purposes.

(2) Electronic data interchange requirements. A taxpayer must comply with the following requirements for records received through electronic data interchange:

1. Where a taxpayer uses an electronic data interchange process and technology, the level of record detail, in combination with other records related to the transactions, must be equivalent to that contained in an acceptable paper record. For example, for sales tax purposes the retained records should contain the following minimal information: vendor name, invoice date, product description, quantity purchased, price, amount of tax, indication of tax status, and shipping details. Codes may be used to identify some or all of the data elements, provided that the taxpayer provides a method which allows the department to interpret the coded information.

2. The taxpayer may capture the information necessary to satisfy the requirements set forth in the preceding paragraph at any level within the accounting system and need not retain the original EDI transaction records provided that the audit trail, authenticity, and integrity of the retained records can be established. For example, a taxpayer using electronic data interchange technology receives electronic invoices from its suppliers. The taxpayer decides to retain the invoice data from completed and verified EDI transactions in its accounts payable system rather than to retain the EDI transactions themselves. Since neither the EDI transaction nor the accounts payable system captures information from the invoice pertaining to product description and vendor name (i.e., they contain only codes for that information), the taxpayer also retains the other records such as its vendor master file and product code description lists and makes them available to the department. In this example, the taxpayer need not retain its original EDI transaction for tax purposes.

(3) Electronic data processing systems requirements. The requirements for an electronic data processing accounting system should be similar to that of a manual accounting system, in that an adequately designed accounting system should incorporate methods and records that will satisfy the requirements of this regulation. In addition, pursuant to Iowa Code sections 421.9, 422.15, 422.36, 422.50, 422.59, 422A.1, and 423.21, the department must have access to the taxpayer's EDI processing, accounting, or other systems for the purposes of verifying or evaluating the integrity and reliability of those systems to provide accurate and completerecords.

(4) Business process information. To verify the accuracy of the records being retained, the taxpayer must comply with the following:

1. Upon the request of the department, the taxpayer shall provide a description of the business process that created the retained records. The description must include the relationship between the records and the tax documents prepared by the taxpayer and the measures employed to ensure the integrity of the records.

2. The taxpayer must be capable of demonstrating the following:

* The functions being performed as they relate to the flow of data through the system;

* The internal controls used to ensure accurate and reliable processing; and

* The internal controls used to prevent unauthorized addition to, alteration, or deletion of retained records.

3. The following specific documentation is required for machine-sensible records retained pursuant to this regulation:

* Record formats or layouts;

* Field definitions (including a record of any changes in the system or codes with the meaning of all codes used to represent information);

* File descriptions (e.g., data set name); and

* Detailed charts of accounts and account descriptions.

c. Record maintenance requirements. The department recommends, but does not require, that taxpayers refer to the National Archives and Record Administration's (NARA) standards for guidance on the maintenance and storage of electronic records such as the labeling of records, the location and security of the storage environment, the creation of backup copies, and the use of periodic testing to confirm the continued integrity of the records. (The NARA standards may be found at 36 Code of Federal Regulations, Part 1234, July 1, 1995, Edition.) The taxpayer's computer hardware or software must accommodate the extraction and conversion of retained machine-sensible records.

d. Access to machine-sensible records. If a taxpayer retains records required to be retained under this regulation in both machine-sensible and hard-copy formats, the taxpayer must make the records available to the department inmachine-sensible format upon the request of the department.

(1) The manner in which the department is provided access to machine-sensible records may be satisfied through a variety of means that must take into account a taxpayer's facts and circumstances through consultation with the taxpayer.

(2) Access will be provided in one or more of the following manners:

1. The taxpayer may arrange to provide the department with the hardware, software, and personnel resources to access the machine-sensible records.

2. The taxpayer may arrange for a third party to provide the hardware, software, and personnel resources necessary to access the machine-sensible records.

3. The taxpayer may convert the machine-sensible rec-ords to a standard record format specified by the department, including copies of files, on magnetic medium that is agreed to by the department.

4. The taxpayer and the department may agree on other means of providing access to the machine-sensible records.

e. Taxpayer's responsibility and discretionary authority. In conjunction with meeting the requirements of paragraph "b" of this subrule, a taxpayer may create files solely for the use of the department. For example, if a database management system is used, it is consistent with this subrule forthe taxpayer to create and retain a file that contains thetransaction-level detail from the database management system and that meets the requirements of paragraph "b" of this subrule. The taxpayer should document the process that created the separate file to show the relationship between that file and the original records. A taxpayer may contract with a third party to provide custodial or management services of the records. Such a contract will not relieve the taxpayer of its responsibilities under this rule.

f. Alternative storage media. For purposes of storage and retention, taxpayers may convert hard-copy documents received or produced in the normal course of business and required to be retained under this rule to microfilm, microfiche, or other storage-only imaging systems and may discard the original hard-copy documents, provided the rules governing alternative storage media are met. For details regarding alternative storage see subrule 11.4(2), Microfilm and related record systems.

g. Effect on hard-copy record-keeping requirements. Except as otherwise provided, the provisions of this subrule do not relieve taxpayers of the responsibility to retain hard-copy records that are created or received in the ordinary course of business as required by existing law and rules. Hard-copy records may be retained on alternative storage media as indicated in paragraph "f" above and subrule 11.4(2).

If hard-copy records are not produced or received in the ordinary course of transacting business (e.g., when the taxpayer uses electronic data interchange technology), hard-copy records need not be created.

Hard-copy records generated at the time of transaction using a credit or debit card must be retained unless all the details necessary to determine correct tax liability relating to the transaction are subsequently received and retained by the taxpayer in accordance with this regulation. Such details include those listed in 11.4(4)"b"(2)"1."

Computer printouts that are created for validation, control, or other temporary purposes need not be retained.

Nothing in this rule will prevent the department from requesting hard-copy printouts in lieu of retained machine-sensible records at the time of examination.

ITEM 2. Amend subrule 38.3(1) to read as follows:

38.3(1) Every individual subject to the tax imposed by Iowa Code section 422.5 (whether or not the individual incurs liability for the tax) and every withholding agent subject to the provisions of Iowa Code section 422.16 shall retain those books and records as required by Section 6001 of the Internal Revenue Code and federal income tax regulation 1.6001-1(e) including the federal income tax return and all supporting federal schedules. For taxpayers using an electronic data interchange process or technology also see 701--subrule 11.4(4).

ITEM 3. Amend rule 701--41.1(422), introductory paragraph, as follows:

701--41.1(422) Verification of deductions required. Deductions from gross income, otherwise allowable, will not be allowed in cases where the department requests the taxpayer to furnish information sufficient to enable it to determine the validity and correctness of such deductions, until such information is furnished. For taxpayers using an electronic data interchange process or technology also see 701--subrule 11.4(4).

ITEM 4. Amend subrule 51.3(1) as follows:

51.3(1) Every corporation subject to the tax imposed by Iowa Code section 422.33 (whether or not the corporation incurs liability for the tax) shall retain its books and records as required by Section 6001 of the Internal Revenue Code and Treasury Regulation Section 1.6001-1(e) including the federal schedules required by 701--subrule 52.3(3). For taxpayers using an electronic data interchange process or technology also see 701--subrule 11.4(4).

ITEM 5. Amend subrule 57.3(1) as follows:

57.3(1) Every financial institution subject to the tax imposed by Iowa Code section 422.60 (whether or not the financial institution incurs liability for the tax) shall retain its books and records as required by Section 6001 of the Internal Revenue Code and federal income tax regulation 1.6001-1(e) including the federal schedules required by 701--subrule 58.3(2). For taxpayers using an electronic data interchange process or technology also see 701--subrule 11.4(4).

ITEM 6. Amend rule 701--67.3(452A), introductory paragraph, as follows:

701--67.3(452A) Taxpayers required to keep records. The records required to be kept by this rule must be preserved for a period of three years and will be open for examination by the department during this period of time. The department, after an audit and examination of the records, may authorize the disposal of the records required to be kept upon written request by the taxpayer. For taxpayers using an electronic data interchange process or technology also see 701--subrule 11.4(4).

ITEM 7. Amend rule 701--81.4(453A), introductory paragraph, as follows:

701--81.4(453A) Records. Every taxpayer subject to the provisions of Iowa Code chapter 453A shall keep, preserve, and make available to the department records for a period of two years. The following is a list of records subject to the provisions of this rule. For taxpayers using an electronic data interchange process or technology also see 701--subrule 11.4(4).

ITEM 8. Amend subrule 86.3(1) as follows:

86.3(1) Audits. Upon filing of the inheritance tax return, the department shall audit and examine it and determine the correct tax due. A copy of the federal estate tax return shall be filed with the inheritance tax return in those estates where federal law requires the filing of a federal estate tax return. The department may request the submission of wills, trust instruments, contracts of sale, deeds, appraisals and such other information as may reasonably be necessary to establish the correct tax due. Tiffany v. County Board of Review, 188 N.W.2d 343, 349 (Iowa 1971). For taxpayers using an electronic data interchange process or technology also see 701--subrule 11.4(4). The person or persons liable for the payment of the tax imposed by Iowa Code chapter 450 shall keep the records relating to the gross and net estate required for federal estate tax purposes under 26 U.S.C. Section 6001 of the Internal Revenue Code and federal regulation Section 20.6001-1.

ITEM 9. Amend subrule 89.2(4) as follows:

89.2(4) Required records. The taxpayer shall keep rec-ords and accounts necessary to substantiate reportable income and deductions. Upon request, the taxpayer shall furnish the department documents, such as copies of tax returns, court orders, trust instruments, annual reports, canceled checks and like information, as may be reasonably necessary to enable the department to determine the correct tax liability. Tiffany v. County Board of Review, 188 N.W.2d 343, 349 (Iowa 1971). For taxpayers using an electronic data interchange process or technology also see 701--subrule 11.4(4).

ITEM 10. Amend rule 701--103.4(422A) as follows:

701--103.4(422A) Retailers required to keep records. Every retailer shall keep and preserve the following records:

1. A daily record of the amount of all cash and time payments and credit sales from the renting of rooms subject to tax under Iowa Code chapter 422A.

2. A record of all deductions and exemptions taken in filing a tax return.

The records required in this rule must be preserved for a period of five years and open for examination by the department during this period of time.

Retailers performing all or part of their record keeping and retention of books, records, and other sources of information under electronic data interchange process or technology, see 701--subrule 11.4(4).

If a tax liability has been assessed and an appeal is pending to the department, state board of tax review or district or supreme court, books, papers, records, memoranda or documents specified in this rule which relate to the period covered by the assessment must be preserved until the final disposition of the appeal. This provision applies equally to parties to the appeal and other retailers who could claim a refund as a result of the resolution of the appeal.

Failure to keep and preserve adequate records shall be grounds for revocation of the sales tax permit.

This rule is intended to implement Iowa Code sections 422.50 and 422A.1.

ARC 7622A

Pursuant to the authority of Iowa Code section 47.6, the Secretary of State hereby gives Notice of Intended Action to amend Chapter 21, "Election Forms and Instructions," and Chapter 22, "Alternative Voting Systems," Iowa Administrative Code.

These amendments make technical corrections and clarifications to administrative rules promulgated by the Secretary of State. The amendment to subrule 21.800(3), paragraph "b," subparagraph (1), removes an incorrect statement: "The rate shall be set by the county board of supervisors and shall be uniform throughout the county." This statement is inconsistent with Iowa Code section 422B.1. The amendment to subrule 22.201(2) clarifies a procedure for authenticating the test results removed from a precinct tabulating device. Rule 22.221(52) is amended to remove the erroneous requirement that sample ballots be posted in voting booths. Iowa Code chapter 52 does not require this; the rule was poorly drafted and not intended to make that requirement.

Any interested person may make written suggestions or comments on the proposed amendments on or before Tuesday, November 25, 1997. Written comments should be sent to the Elections Division, Office of the Secretary of State, Second Floor, Hoover State Office Building, Des Moines, Iowa 50319-0138, fax (515)242-5953. Anyone who wishes to comment orally may telephone the Elections Division at (515)281-5865 or visit the office on the second floor of the Hoover Building.

There will be a public hearing on Tuesday, November 25, 1997, at 1:30 p.m. in the office of the Secretary of State, Second Floor, Hoover State Office Building. People may comment orally or in writing. Persons who speak at the hearing will be asked to give their names and addresses for the record and to confine their remarks to the subject of the amendments.

These amendments are intended to implement Iowa Code sections 52.3 and 422B.1.

The following amendments are proposed.

ITEM 1. Amend subrule 21.800(3), paragraph "b," subparagraph (1), as follows:

(1) The rate of the tax. The rate shall be set by the county board of supervisors and shall be uniform throughout the county.

ITEM 2. Amend subrule 22.201(2) as follows:

22.201(2) All tabulating devices shall be tested before each election in accordance with Iowa Code section 52.38. The In addition to any certification produced on the printout the paper printout produced in testing the tabulating device shall be signed at the end where the tape will be detached from the machine by the person conducting the test and by any observers present at the test. and the The tape shall be torn or cut across the signature, so that a portion of the signature is on the tape remaining on the tabulating device. The test results tape, including a part of the tester's signature, shall be delivered to the precinct election officials to display throughout election day with the report showing all counters have been reset to zero in the precinct. Immediately after the test is finished the tabulating device, the ballot box, and the door to any compartment containing the programming for the election shall be sealed or locked by the person performing the test.

ITEM 3. Amend rule 22.221(52) to read as follows:

721--22.221(52) Sample ballots and instructions to voters. Sample special paper ballots and printed instructions for casting votes on special paper ballots shall be prominently displayed in each polling place and. Instructions shall also be displayed inside each voting booth. Each special paper ballot shall also include an example of the method of marking the ballot recommended by the manufacturer of the tabulating device. Further instructions shall be provided to any voter who requests assistance in accordance with Iowa Code section 49.90.

ARC 7612A

Pursuant to the authority of Iowa Code sections 307.10 and 307.12, the Department of Transportation hereby gives Notice of Intended Action to amend Chapter 425, "Motor Vehicle and Travel Trailer Dealers, Manufacturers, Distributors and Wholesalers," and to adopt Chapter 641, "Financial Liability Coverage Cards," Iowa Administrative Code.

1997 Iowa Acts, House File 514, provides for the following: Effective January 1, 1998, a driver of a motor vehicle registered in Iowa or subject to registration in Iowa must carry in the motor vehicle a financial liability coverage card. Insurance carriers authorized to do business in Iowa and the Department of Transportation are required to distribute financial liability coverage cards by December 1, 1997. The Department is required to adopt rules regarding the content of financial liability coverage cards.

Also, the bill sets out the minimum limits of financial liability coverage for motor vehicle dealers.

Any person or agency may submit written comments concerning these proposed rules or may submit a written request to make an oral presentation. The comments or request shall:

1. Include the name, address and telephone number of the person or agency authoring the comments or request.

2. Reference the number and title of the proposed rule, as given in this Notice, that is the subject of the comments or request.

3. Indicate the general content of a requested oral presentation.

4. Be addressed to the Department of Transportation, Director's Staff Division, 800 Lincoln Way, Ames, Iowa 50010; fax (515)239-1639.

5. Be received by the Director's Staff Division no later than November 25, 1997.

A meeting to hear requested oral presentations is scheduled for Tuesday, December 2, 1997, at 10 a.m. in the conference room of the Motor Vehicle Division, which is located on the lower level of Park Fair Mall, 100 Euclid Avenue, Des Moines.

The meeting will be canceled without further notice if no oral presentation is requested.

The proposed amendments may have an impact on small business. The Department has considered the factors listed in Iowa Code subsection 17A.31(4), paragraphs "a" to "l." The following may request the issuance of a regulatory flexibility analysis: the Administrative Rules Review Committee, the Governor, a political subdivision, at least 25 persons signing the request who qualify as a small business, or an organization registered with the Department and representing at least 25 persons. The request must:

1. Include the name, address and telephone number of the person(s) authoring the request.

2. Be submitted in writing to the Director's Staff Division at the address listed in this Notice.

3. Be delivered to the Director's Staff Division or postmarked no later than 20 days after publication of this Notice in the Iowa Administrative Bulletin.

These amendments are intended to implement 1997 Iowa Acts, House File 514.

Proposed rule-making actions:

ITEM 1. Amend rule 761--425.10(322) by adding the following new subrule:

425.10(8) Financial liability. The applicant for a motor vehicle dealer's license shall certify on the application that the applicant has the required financial liability coverage in the limits as set forth in Iowa Code section 322.4 as amended by 1997 Iowa Acts, House File 514, section 12. It is the applicant's responsibility to ensure the required financial liability coverage is continuous with no lapse in coverage as long as the applicant maintains a valid dealer's license.

ITEM 2. Adopt the following new chapter:

641.1(1) The purpose of this chapter is to establish requirements for financial liability coverage cards.

641.1(2) This chapter applies to motor vehicles registered in Iowa or subject to registration in Iowa.

641.1(3) This chapter does not address proof of financial responsibility under Iowa Code chapter 321A except for the issuance of financial liability coverage cards.

641.1(4) Proof of financial liability coverage for motor vehicle dealers is addressed in 761--subrule 425.10(8).

761--641.2(321) Definitions.

"Fleet" means five or more motor vehicles covered under an insurance policy, or one or more motor vehicles covered by a bond filed under Iowa Code section 321A.24, a security certificate issued under section 321A.25, or a self-insurance certificate issued under section 321A.34.

"Registration number" as used in 1997 Iowa Acts, House File 514, section 2, Iowa Code subsection 321A.24(1) and Iowa Code subsection 321A.25(1) means vehicle identification number.

761--641.3(321) Content of financial liability coverage card.

641.3(1) A financial liability coverage card issued by an insurance company for a motor vehicle that is not insured as a part of a fleet shall contain the following information:

a. Either one of the following:

(1) Name, address and telephone number of insurer.

(2) Name of insurer and name, address and telephone number of insurance agency.

b. Name of insured.

c. Policy number.

d. Vehicle identification number of the insured motor vehicle.

e. Year and make of the insured motor vehicle.

f. Either one of the following:

(1) Type of coverage provided; for example, personal automobile, business automobile, commercial automobile.

(2) The statement, "Coverage provided by this policy meets the minimum liability limits prescribed by law," or a statement that is substantially similar.

g. Effective and expiration dates of coverage.

h. The statement, "This card must be carried in the insured motor vehicle at all times," or a statement that is substantially similar.

641.3(2) An insurance company shall issue a financial liability coverage card for each motor vehicle insured as a part of a fleet. The fleet owner shall maintain a card in each fleet vehicle. The card shall contain the following information:

a. Either one of the following:

(1) Name, address and telephone number of insurer.

(2) Name of insurer and name, address and telephone number of insurance agency.

b. Name of insured.

c. Policy number.

d. Either the vehicle identification number or the words "all owned vehicles" or the word "fleet."

e. Either one of the following:

(1) Type of coverage provided; for example, personal automobile, business automobile, commercial automobile.

(2) The statement, "Coverage provided by this policy meets the minimum liability limits prescribed by law," or a statement that is substantially similar.

f. Effective and expiration dates of coverage.

g. The statement, "This card must be carried in the insured motor vehicle at all times," or a statement that is substantially similar.

641.3(3) One financial liability coverage card shall be issued by the department for each fleet covered by a bond filed under Iowa Code section 321A.24, a security certificate issued under section 321A.25, or a self-insurance certificate issued under section 321A.34. The fleet owner shall maintain a copy of the card in each fleet vehicle. The card shall contain the following information:

a. Name, address and telephone number of person to whom the card is issued.

b. Number assigned by the department.

c. Either the vehicle identification number or the words "all owned vehicles" or the word "fleet."

d. Type of coverage provided.

e. The statement, "This card must be carried in the covered motor vehicle at all times."

761--641.4(321) Responsibilities of insurer.

641.4(1) Each insurer issuing financial liability coverage in this state shall furnish a financial liability coverage card that complies with these rules to the named insured for each motor vehicle insured. The card shall be provided with every new policy and every policy renewal issued.

641.4(2) The insurer shall file a true and correct, sample copy of its financial liability coverage card with the Iowa insurance division.

761--641.5(321) Acquisition of additional or replacement motor vehicles.

641.5(1) A financial liability coverage card that provides coverage for a replacement motor vehicle may be used temporarily in a replacement motor vehicle for 30 days if ownership evidence as described in 761--subrule 400.19(3) is carried in the motor vehicle.

641.5(2) A copy of a financial liability coverage card that provides coverage for an additionally acquired motor vehicle may be used temporarily in an additionally acquired motor vehicle for 30 days if ownership evidence as described in 761--subrule 400.19(3) is carried in the motor vehicle.

761--641.6(321) New policies. On new policy applications, a binder of liability coverage issued by an insurance agent authorized to conduct insurance business in this state is acceptable proof of financial liability coverage for a period of 30 days from date of issue of the binder.

These rules are intended to implement 1997 Iowa Acts, House File 514.

October 1, 1996 -- October 31, 1996 8.75%

November 1, 1996 -- November 30, 1996 8.75%

December 1, 1996 -- December 31, 1996 8.50%

January 1, 1997 -- January 31, 1997 8.25%

February 1, 1997 -- February 28, 1997 8.25%

March 1, 1997 -- March 31, 1997 8.50%

April 1, 1997 -- April 30, 1997 8.50%

May 1, 1997 -- May 31, 1997 8.75%

June 1, 1997 -- June 30, 1997 9.00%

July 1, 1997 -- July 31, 1997 8.75%

August 1, 1997 -- August 31, 1997 8.50%

September 1, 1997 -- September 30, 1997 8.25%

October 1, 1997 -- October 31, 1997 8.25%

November 1, 1997 -- November 30, 1997 8.25%

ARC 7610A

The Board of Veterinary Medicine voted at the Board's March 27, 1997, meeting to allow candidates with academic credentials, in the opinion of the Board, equal to or equivalent to the two-year curriculum offered at schools of Veterinary Technology, to make an application to take the examination required to become a "Veterinary Technician." This amendment would have implemented this action by the Board and allowed candidates with studies and training in other health care fields to be examined for proficiency as a "Veterinary Technician."

Because of opposition to the amendment during the public comment period, the Board voted to terminate the rule making commenced in ARC 7473A.

This amendment is intended to increase the maximum size of anhydrous ammonia cargo tanks which are used with anhydrous ammonia field application equipment.

In compliance with Iowa Code section 17A.4(2), the Department finds that notice and public participation are impractical because it is in the best interest of the industry and the public that the amendment be effective immediately in order for the change to be applicable for the present and upcoming application season.

The Department also finds, pursuant to Iowa Code section 17A.5(2)"b"(2), that the normal effective date of the amendment should be waived and this amendment should be made effective upon filing with the Administrative Rules Coordinator on October 17, 1997, as it confers a benefit upon the industry and the public by permitting more efficient movement of anhydrous ammonia and reducing dangers to the public by decreasing the number of cargo tanks on the public roads.

This amendment is also being published herein under Notice of Intended Action as ARC 7628A to allow for public comment.

This amendment is intended to implement Iowa Code chapter 200.

The following amendment is adopted.

Amend rule 21--43.6(200) by rescinding numbered paragraph "16" and inserting in lieu thereof the following new numbered paragraph:

16. Strike subrule 9.7.3 in its entirety and insert in lieu thereof the following:

9.7.3 A cargo tank of 3,500 gallons or less water capacity may be unloaded into permanent storage locations meeting the requirements of 3.4.1 and 5.10.8 or into implements of husbandry meeting the requirements of 11.1 through 11.7. A cargo tank of greater than 3,500 gallons water capacity but not greater than 5,000 gallons water capacity may be unloaded at permanent storage locations meeting the requirements of 3.4.1 and 5.10.8 or into a portable application equipment container which is capable of holding the entire load. A cargo tank of greater than 5,000 gallons water capacity may only be unloaded into a permanent storage location meeting the requirements of 3.4.1 and 5.10.8 and capable of holding the entire load.

ARC 7614A

Subrule 1.2(2) is amended to grant exception authority to the Executive Director when certain conditions are met as set forth in a new subrule 1.2(3).

The Commissioners of Elder Affairs approved these amendments August 20, 1997. Notice of Intended Action regarding these amendments was published in the Iowa Administrative Bulletin on September 10, 1997, as ARC 7498A. In compliance with Iowa Code section 17A.4(1)"b," a public hearing was held on September 30, 1997. Comments received were in support of the amendments. These amendments are identical to those published under Notice of Intended Action.

The Department of Elder Affairs finds, pursuant to Iowa Code section 17A.5(2)"b"(2), that the normal effective date of the amendments should be waived and the amendments made effective upon publication. There are several applications for assisted living program certification being held up waiting for waiver determination on room size. Delaying implementation could negatively impact older Iowans waiting for appropriate housing as well as create financial hardship on providers.

These amendments are intended to implement Iowa Code section 231.21.

These amendments will become effective November 5, 1997.

The following amendments are adopted.

ITEM 1. Amend subrule 1.2(2) as follows:

1.2(2) Applicability to various groups. The rules set forth herein apply to all grants awarded to any recipient through the department. Unless otherwise specified, the rules reflect legislative mandate, federal requirements, or commission policies and thus should be regarded as mandatory. Compliance with these administrative rules shall be mandatory, unless an exception is granted in accordance with the procedure in subrule 1.2(3).

ITEM 2. Amend rule 321--1.2(231) by adding the following new subrule:

1.2(3) Exceptions. Exceptions to the department's rules may be granted in individual cases upon the executive director's own initiative or upon request.

a. Procedures for requests.

(1) Requests for exceptions must be submitted in writing to the Executive Director, Iowa Department of Elder Affairs, Clemens Building, 200 Tenth Street, Des Moines, Iowa 50309-3609.

(2) A request for an exception should include the following information where applicable:

1. The name and address of the person or entity for whom an exception is being requested and the person requesting the exception, if different from the person or entity for whom an exception is being requested.

2. The specific rule to which an exception is requested or the substance thereof.

3. The specific exception requested.

4. Facts relevant to the factors listed in paragraph 1.2(3)"b."

5. A history of the department's action on the case.

6. Any information known to the requester on the department's treatment of similar cases.

7. Requests for exceptions shall be acknowledged within 5 working days and shall be responded to in writing within 60 days of receipt of the request.

b. Policy. Exceptions are granted at the complete discretion of the executive director after consideration of all relevant factors, including but not limited to the following:

(1) Whether there are exceptional circumstances justifying an exception to the general subrule 1.2(2).

(2) Whether granting the exception would result in net savings to the state or promote efficiency in the administration of programs or service delivery. Net savings or efficiency will make an exception more likely.

(3) The cost of the exception to the state and the availability of funds in the department's budget.

(4) Whether granting the exception would be in the public interest.

c. The executive director's denial of a request for exception constitutes final agency action.

Notice of Intended Action was published in the Iowa Administrative Bulletin on August 13, 1997, as ARC 7442A. A public hearing was held on September 17, 1997.

This amendment implements 1997 Iowa Acts, House File 335, by allowing licensees practicing out of state the ability to meet Iowa's continuing education requirements by meeting the requirements of the state in which they practice.

There are no changes as a result of the public hearing and this amendment is identical to that published under Notice of Intended Action.

This amendment is intended to implement Iowa Code section 272C.2.

This amendment will become effective December 10, 1997.

Amend rule 650--25.7(153), second unnumbered paragraph, as follows.

A dentist or dental hygienist licensed to practice in this state shall be deemed to have complied with the continuing education requirements of this state during periods that the person serves honorably on active duty in the military services, or for periods that the person is a resident of practices dentistry or dental hygiene in another state or district having a continuing education requirement for dentistry or dental hygiene and meets all requirements of that state or district for practice therein, or for periods that the dentist or dental hygienist is a government employee working in the person's licensed specialty and assigned to duty outside of the United States, or for other periods of active practice and absence from the state approved by the board.

ARC 7634A

These amendments change the term "general anesthesia" to "deep sedation/general anesthesia" and the term "parenteral sedation" to "parenteral conscious sedation" as they appear in this chapter. Also, the amendments clarify the equipment requirements, educational requirements, auxiliary requirements, renewal requirements and rules for denial and nonrenewal.

Notice of Intended Action was published in the Iowa Administrative Bulletin on August 13, 1997, as ARC 7440A. A public hearing was held on September 17, 1997. No comments were received.

These amendments are identical to the Notice of Intended Action except for a change in the wording of subrule 29.9(1) which ensures that the committee members are covered by the immunity provisions of Iowa Code section 272C.8. The subrule now reads as follows:

29.9(1) The anesthesia credentials committee is a peer review committee appointed by the board to assist the board in the administration of this chapter. This committee shall be chaired by a member of the board and shall include at least six additional members who are licensed to practice dentistry in Iowa. At least four members of the committee shall hold deep sedation/general anesthesia or parenteral conscious sedation permits issued under this chapter.

These amendments are intended to implement Iowa Code sections 153.33 and 153.34.

These amendments will become effective December 10, 1997.

EDITOR'S NOTE: Pursuant to recommendation of the Administrative Rules Review Committee published in the Iowa Administrative Bulletin, September 10, 1986, the text of these rules [amendments to Ch 29] is being omitted. With the exception of the change noted above, these rules are identical to those published under Notice as ARC 7440A, IAB 8/13/97.

ARC 7633A

Notice of Intended Action was published in the Iowa Administrative Bulletin on August 13, 1997, as ARC 7441A. A public hearing was held on September 17, 1997.

This amendment implements 1997 Iowa Acts, House File 335, and will allow public board member participation in disciplinary hearing panels. Also included is a provision to require that a person whose license was suspended by the Board may be subject to reexamination at the time of reinstatement.

There are no changes as a result of the public hearing and these amendments are identical to those published under Notice of Intended Action.

These amendments are intended to implement Iowa Code section 272C.6.

These amendments will become effective December 10, 1997.

The following amendments are adopted.

ITEM 1. Amend subrule 51.4(1) as follows:

51.4(1) A hearing may be conducted before the board or a panel of not less than three members of the board who are licensed to practice dentistry or dental hygiene in this state. at least two of whom are licensed by the board.

ITEM 2. Amend subrule 51.12(7) as follows:

51.12(7) A person whose license to practice dentistry or dental hygiene was revoked or suspended must successfully complete the examination required at the time of reinstatement for dental or dental hygiene licensure. The board may in its discretion require remedial training in addition to or in lieu of the examination requirements.

ARC 7613A

The Commissioners of Elder Affairs approved these amendments August 20, 1997. Notice of Intended Action was published in the Iowa Administrative Bulletin on September 10, 1997, as ARC 7499A. The adopted amendments are identical to those published under Notice of Intended Action.

The amendment in subparagraph 7.3(9)"b"(5) clarifies that the food service establishment license refers to what was known in the past as "restaurant" license. This change is to be consistent with the Department of Inspections and Appeals rule in 481--30.6(137A,137B).

The amendment in subrule 7.3(13) revises the required semiannual on-site meal evaluations by the 13 area agencies on aging to annual on-site evaluations. An additional self-assessment would be submitted by meal site personnel midway between the annual on-site evaluations.

These amendments will become effective on December 10, 1997.

These amendments are intended to implement Iowa Code sections 231.32 and 231.33.

The following amendments are adopted.

ITEM 1. Amend subparagraph 7.3(9)"b"(5) as follows:

(5) Ensure that any facility housing an AOA program or service will fully comply with federal, state or local health, fire, sanitation, accessibility, and licensure requirements as outlined in subrule 7.1(3). All congregate nutrition sites must be inspected by the department of inspections and appeals and must have a current food service establishment (restaurant) license posted in the congregate nutrition site;

ITEM 2. Amend subrule 7.3(13) as follows:

7.3(13) Evaluation of sites. The AAA shall conduct Conduct, record and keep on file systematic on-site evaluations on a semiannual an annual basis in order to document program compliance and analyze areas for ongoing monitoring.

a. This evaluation shall include, at a minimum, the following topics:

(1) Food safety.

(2) Required one-third of the daily recommended dietary allowances as established by the Food and Nutrition Board of the National Research Council of the National Academy of Sciences.

(3) Food quality and acceptability (appearance, taste, temperature and smell).

(4) Additions to a meal, such as sociability and activities.

b. The AAA will provide a tool to guide food service personnel at each meal site in a self-assessment to be done at midpoint between AAA on-site evaluations. These two evaluations will be done to document program compliance and analyze areas for ongoing monitoring.

c. Written assessment reports shall be kept on file for three years, and shall include:

(1) AAA on-site evaluation.

1. What is observed.

2. Areas of deficiency.

3. Plan for corrective action.

(2) Food service personnel self-assessments.

ARC 7619A

The Council on Human Services adopted these amendments October 15, 1997. Notice of Intended Action regarding these amendments was published in the Iowa Administrative Bulletin on September 10, 1997, as ARC 7491A.

These amendments revise the Medicaid managed health care rules to reflect that primary mental health services are no longer the responsibility of a contracting Health Maintenance Organization (HMO) and that Medicaid Patient Managers (known as the MediPASS managers) are not required to authorize mental health services. These changes were inadvertently missed when the managed health care rules were amended to remove mental health services from the responsibility of the HMO.

Language which was removed from rules previously reflecting the need to have counties noted in the Department's managed health care 1915(b) freedom of choice waiver is being returned in response to technical assistance from the Health Care Financing Administration.

These amendments are identical to those published under Notice of Intended Action.

These amendments are intended to implement Iowa Code section 249A.4.

These amendments shall become effective January 1, 1998.

The following amendments are adopted.

ITEM 1. Amend rule 441--88.5(249A) as follows:

Amend subrule 88.5(2), paragraph "a," by rescinding and reserving numbered paragraph "13."

Amend subrule 88.5(3) by adding the following new paragraph "i."

i. Psychiatric services.

ITEM 2. Amend subrule 88.43(1) as follows:

88.43(1) Designation as a mandatory project county. The department shall designate mandatory enrollment counties included in the project. In order for a county to be considered a mandatory project county, the number of MediPASS providers willing to serve as patient managers shall be sufficient to meet the needs of the size and makeup of the recipient population in the county, and the county shall be included in the department's freedom of choice waiver from the health care financing administration.

ITEM 3. Amend subrule 88.48(1) by rescinding and reserving paragraph "i."

ARC 7620A

The Council on Human Services adopted this amendment October 15, 1997. Notice of Intended Action regarding this amendment was published in the Iowa Administrative Bulletin on August 13, 1997, as ARC 7423A.

This amendment clarifies an existing rule regarding the process for contesting paternity establishment in response to a petition for rule making. The Department received a petition for rule making asking that the existing rule be clarified to state the alleged father may contest the paternity establishment by submitting a written statement to the address of the unit "as set forth in the notice." The current rule states the alleged father may contest the paternity establishment by submitting a written statement to the address of the unit "that issued the notice."

This amendment is identical to that published under Notice of Intended Action.

This amendment is intended to implement Iowa Code chapter 252F.

This amendment shall become effective January 1, 1998.

The following amendment is adopted.

Amend rule 441--99.27(252F) as follows:

441--99.27(252F) Paternity contested. The alleged father may contest the paternity establishment by submitting, within 20 calendar days after service of the notice upon him, as provided in rule 441--99.23(252F), a written statement contesting paternity to the address of the unit that issued as set forth in the notice. The mother may contest paternity establishment by submitting, within 20 calendar days after the unit mailed her notice of the action or within 20 calendar days after the alleged father is served with the original notice, whichever is later, a written statement contesting paternity to the address of the unit that issued as set forth in the notice. When paternity is contested, or at the unit's initiative, the unit shall issue ex parte administrative orders requiring the alleged father, the mother and the child to submit to paternity testing.

ARC 7621A

The Council on Human Services adopted these amendments October 15, 1997. These amendments combine two Notices of Intended Action. Notices of Intended Action regarding these amendments were published in the Iowa Administrative Bulletin on July 30, 1997, as ARC 7404A, and on August 13, 1997, as ARC 7424A.

Eight public hearings were held around the state regarding the amendments noticed as ARC 7404A. Seven persons attended and three agencies submitted written comments. One public hearing was held in Des Moines regarding the amendments noticed as ARC 7424A. One person attended and no comments were submitted.

The amendments noticed as ARC 7404A implement the following changes designed to streamline the Rehabilitative Treatment and Supportive Services program:

* Paragraphs 108.7(13)"a," 156.7(2)"f," 182.5(5)"c," and 185.10(4)"c" are revised to eliminate the requirement that providers duplicate the list of the services authorized and the duration authorized on the treatment plan. This information is already on Form 470-3055, Referral of Client for Rehabilitative Treatment and Supportive Services, which is required to be in each file. These revisions also eliminate the provider requirement to send treatment plans to the child's guardian ad litem and attorney. The referral workers are responsible for sending these treatment plans, and with this change the providers will no longer be duplicating the referral workers' actions and responsibilities. Language for treatment plan goals and objectives is revised to clarify that goals are statements of outcomes or results to be achieved and objectives are the measurable indicators of change toward progress to a goal. The participation level for the development and revision of treatment and service plans is changed from a consulting role to a collaborative effort between the provider, referral worker, child, family, and foster parent, if applicable. When a plan is developed through a collaborative effort, families and other parties to the plan will have a better understanding and ownership of the plan.

* Paragraphs 108.7(13)"b," 156.7(2)"i," 182.5(5)"f," 185.10(6)"a," 185.10(6)"e," 185.10(6)"f," 185.10(6)"h," 185.10(6)"j," 185.10(8)"d," and 185.10(8)"e" are revised to eliminate the three different time frames for progress reports and to simplify the requirements for a progress report to require a progress report every 90 days from the date of initiation of services. The requirement that providers send psychosocial evaluations and progress reports to the child's guardian ad litem and attorney is eliminated. The referral workers send these reports and this change eliminates duplication. With these changes, providers will only be responsible for having a case permanency plan in their files when referral workers send them a copy. Additional changes in these paragraphs eliminate and streamline the requirements for maintaining demographic data or correspondence which is duplicative or unnecessary.

Current policy requires three different time frames for progress reports which is cumbersome to manage. A progress report every 90 days from the date of initiation of services is consistent with other accrediting bodies and is the minimum the Health Care Financing Administration would accept.

* Rules 441--114.2(237) and 441--114.7(237) are revised to clarify that the same safety and health checks for employed staff working in group care facilities for children are required for independent contractors or any other persons who contract with the facility, and volunteers.

* Subrule 152.2(23) is revised to remove the requirement for the project manager to approve all provider subcontracts developed to deliver services under the Rehabilitative Treatment and Supportive Services (RTSS) contract with the Department.

* Rules 441--185.9(234) and 441--185.10(234) and subrules 185.11(1), 185.11(2), and 185.11(3) are rescinded or revised to eliminate the rules for granting interim certification while maintaining the rule base for those staff who are grandfathered. Interim certification was a process for transitioning providers from the previous service system to the rehabilitative treatment service system. The transition period is over.

* Subrule 185.10(1) is revised to clarify that an accredited institute is considered the same as a college and university by national accrediting organizations and to specify that certain licensed practitioners of the healing arts meet qualifications based on their licenses.

* Subrule 185.10(5) is revised to clarify who can review and revise treatment plans and when the plans need to be reviewed and to require that the plans must address the behavioral health needs authorized. The participation level for the revision of treatment plans is changed from a consulting role to a collaborative effort between the provider, referral worker, child, family, and foster parent, if applicable.

* Paragraph 185.10(6)"c" is revised to clarify the types of treatment plans to be in the individual client file.

* Paragraph 185.10(6)"g" is revised to clarify the items a treatment service discharge summary must contain including the measurable progress made in treatment and the outcomes or results.

* Subrule 185.11(2) is revised to simplify and streamline the providers' paperwork requirements for the application for certification for rehabilitative treatment services. Paragraph 185.11(2)"d" and subrule 185.11(3) are revised to give providers an appeal process to follow when they disagree with the Department's decision to place their certification in a provisional status.

The amendments noticed as ARC 7424A establish an interim set of procedures for establishing rates for Rehabilitative Treatment and Supportive Services (RTSS) for the period from January 1, 1998, through June 30, 1999. Rules concerning RTSS contracts are also amended to adapt to the changes in how rates will be established and to remove obsolete references to interim certification.

A committee composed of representatives of the Department and RTSS providers have been working together to develop a rate-setting methodology for RTSS which is mutually satisfactory to providers and the Department and meets funding stream requirements.

Under these amendments, the provider and the Regional Administrator of the region which is responsible for administering the provider's contract or the Regional Administrator's designee will negotiate rates based on local conditions while continuing to meet the federal requirements for eligibility for federal financial participation. The previous intensive cost reporting system for setting rates will be avoided.

For rates for services that are currently under contract, the rate currently in effect will be the starting point for negotiation. The starting point for new services will be the weighted average rate for that service.

Adjustment of a current rate is to be based on one or more of the following factors:

(1) Changes in the Consumer Price Index for all Urban Consumers (CPI-U). Any adjustment based on changes in the CPI-U shall not exceed the amount by which the CPI-U increased during the calendar year ending December 31, 1997.

(2) Changes in a provider's allowable costs based on current actual cost data or documented projections of cost. Allowable costs are those costs not excluded pursuant to rule 441--185.104(234).

(3) Changes in program utilization that impact the per unit cost of a program. Rates shall not be adjusted based on utilization levels that are below the minimum effective utilization of 80 percent or actual (whichever is higher) of the licensed or staffed capacity (whichever is less) of the program. If actual utilization is used as a basis for adjusting a rate, the actual effective utilization for the 12-month period immediately preceding the initiation of rate negotiations shall be used.

(4) Changes in the Department's expectations regarding where a service is to be delivered.

(5) Changes proposed by a provider and agreed to by the Department regarding where a service is to be delivered.

(6) Loss of a grant by a provider when the grant amount had previously been used to offset expenses which had resulted in a lower rate for rehabilitative treatment and supportive services.

(7) Changes in state or federal laws, rules or regulations that result in a change in the costs attributable to the services in question, including minimum wage adjustments.

(8) Competitive factors between providers.

(9) Department funding availability.

Providers shall be required to document factors supporting a change from the current rate and disclose subcontracts and related party relationships.

The Health Care Financing Administration (HCFA) requires that the Department be able to tie the rate to the cost of service. For this interim process, the Department is proposing to do this by using the financial and statistical reports on which current rates are based. For rates for this time period, a provider will not have to submit another financial and statistical report. The Department will be working with providers to determine what cost reporting will be required for rates to be established after June 30, 1999.

There will have to be documentation of the basis for increasing or decreasing the current rate based on negotiation. The documentation required will vary, depending on the basis.

If the Department and the provider cannot reach agreement on a rate, a structured rate resolution process involving a mediator will be used to attempt to reach mutual agreement.

Discussion can begin prior to January, but no agreements can be finalized until the rules are effective January 1, 1998. No rates will be effective prior to February 1, 1998. All rates for services currently under contract must be negotiated and in effect by July 1, 1998. Negotiations should begin no later than May 1, 1998. If the rates are not negotiated within the required time frames and agreement is not reached by September 30, 1998, the service shall be deleted from the provider's rehabilitative treatment and supportive services contract no later than November 30, 1998.

These amendments are identical to those published under Notice of Intended Action.

These amendments are intended to implement Iowa Code sections 234.6, 234.38, and 237.8 and Iowa Code chapter 238.

These amendments shall become effective January 1, 1998.

EDITOR'S NOTE: Pursuant to recommendation of the Administrative Rules Review Committee published in the Iowa Administrative Bulletin, September 10, 1986, the text of these rules [amendments to Chs 108, 114, 152, 156, 182] is being omitted. These rules are identical to those published under Notice as ARC 7404A, IAB 7/30/97, and ARC 7424A, IAB 8/13/97.

ARC 7624A

The adopted amendments implement 1997 Iowa Acts, Senate File 161, which modified the holding temperature required for the storage of eggs sold at retail. Additionally, the amendments change the title of a chapter, update references to publications, and clarify the requirements for persons wishing to obtain an egg handler's license.

Notice of Intended Action was published in the Iowa Administrative Bulletin on August 27, 1997, as ARC 7461A. No public comments were received.

The amendments are identical to those published under Notice of Intended Action.

The amendments will become effective December 10, 1997.

These amendments are intended to implement Iowa Code chapters 137A, 137B, and 196 as amended by 1997 Iowa Acts, Senate File 161.

The following amendments are adopted.

ITEM 1. Amend the title of 481--Chapter 30 by striking "Field Survey Administration" and inserting "Food and Consumer Safety".

ITEM 2. Amend rule 481--31.2(137A) as follows:

481--31.2(137A) Wholesale food standards. Standards used to inspect places where wholesale food is manufactured, processed, packaged or stored are found in the Code of Federal Regulations in 21 CFR, Part 110, April 1, 1990 1996, publication, "Current Good Manufacturing Practices in Manufacturing, Processing, Packing, or Holding Human Food."

Standards used to inspect places where bakery products, flour, cereals, food dressings, and flavorings are manufactured on a wholesale basis are found in the Code of Federal Regulations in 21 CFR, Parts 136, 137 and 169, April 1, 1990 1996, publication.

Standards used to inspect places which process low-acid food in hermetically sealed containers are found in 21 CFR, Part 113, April 1, 1990, 1996, "Thermally Processed Low-Acid Food Packaged in Hermetically Sealed Containers."

Standards used to inspect places which process acidified foods are found in 21 CFR, Part 114, April 1, 1996, "Acidified Foods."

Copies of these regulations are available from the Inspections Division, Department of Inspections and Appeals, Lucas State Office Building, Des Moines, Iowa 50319-0083.

ITEM 3. Amend rule 481--31.3(137A) as follows:

481--31.3(137A) Bottled drinking water standards. Standards used to inspect places which process bottled drinking water are found in the Code of Federal Regulations in 21 CFR, Parts 103.35 and 129,129, and 165, April 1, 1990 1996, publication, "Processing and Bottling of Bottled Drinking Water." Water" and "Beverages."

Copies of these regulations are available from the Inspections Division of the Department of Inspections and Appeals, Lucas State Office Building, Des Moines, Iowa 50319.

ITEM 4. Amend 481--Chapter 32 by adding the following new rule:

481--32.6(137B) License required. A license must be granted by the department of inspections and appeals to open or to operate a food service establishment, mobile food unit, pushcart, transient food service establishment, or temporary food service establishment.

ITEM 5. Amend subrules 36.3(1), 36.3(2), and 36.3(8) as follows:

36.3(1) Buildings shall be of sound construction so as to prevent the entrance or harboring of insects, rodents, or vermin. Floors shall be of washable materials and kept clean and floor drains provided where necessary. Walls and ceilings shall be of cleanable material and be kept clean and in good repair.

36.3(2) All areas and rooms in which eggs are handled, graded, and packed shall be kept reasonably clean during working hours and shall be thoroughly cleaned at the end of each operating day. Cartons and cases shall be stored off the floor and storage areas kept clean and dry.

36.3(8) Only United States Department of Agriculture (USDA) or federally approved cleaning and sanitizing compounds and sanitizers may be used. Washed eggs shall be reasonably dry before cartoning or casing. The following substances used in the plant shall be approved and handled in accordance with the manufacturer's instructions: pesticides, insecticides, rodenticides, cleaning compounds, foam control compounds, sanitizers, and inks and oils coming into contact with the product. These products shall be properly stored and segregated.

ITEM 6. Amend rule 481--36.3(196) by inserting new subrules 36.3(9) and 36.3(10) as follows:

36.3(9) A separate refuse room or a designated area for the accumulation of trash must be provided. There shall be a sufficient number of containers to hold trash, which must be maintained in good repair, kept covered when not in use, and cleaned at a frequency to prevent insect and rodent attraction.

36.3(10) Washed eggs must be reasonably dry before being placed in cartons or cases.

ITEM 7. Amend subrules 36.6(1) and 36.6(2) as follows:

36.6(1) From the point time of candling and grading until they reach the consumer, all eggs designated for human consumption shall be held at a an ambient temperature not to exceed 60^oF 45^oF or 7^oC until they reach the consumer. Each refrigerated unit shall be provided with an accurate numerically scaled indicating thermometer which is located at a place that is representative of the air temperature in the unit. This ambient temperature requirement applies to any place or room where eggs are stored, except in a vehicle during transportation.

36.6(2) The 60^oF requirement will begin after the candling and grading and will apply to any place or room in which the eggs are stored, except during transportation where the temperature inside the body of the vehicle may exceed 60^oF, provided the temperature taken inside each master container remains at 60^oF or below. Eggs in transport vehicles may be stored at an ambient temperature above 45^oF or 7^oC, provided the vehicle is equipped with refrigeration units capable of delivering air at that temperature and capable of cooling the vehicle to that temperature.

ITEM 8. Amend 481--Chapter 36 by inserting new rule 481--36.12(196) and renumbering existing rule 481--36.12(196) as 481--36.13(196) as follows:

481--36.12(196) Health and hygiene of personnel.

36.12(1) No person known to be affected by a communicable or infectious disease shall be permitted to come in contact with the product.

36.12(2) Personnel engaged in egg handling operations shall maintain a high degree of personal cleanliness and shall conform to good hygienic practices during working periods. Personnel engaged in egg handling and warewashing operations shall thoroughly wash their hands and the exposed portion of their arms with soap or detergent and warm water before starting to work; after smoking, eating, or using the toilet; and as often as necessary during work to keep their hands and arms clean. Personnel shall keep their fingernails trimmed and clean.

36.12(3) Personnel shall wear clean outer clothing and effective hair restraints where necessary to prevent the contamination of the product.

ARC 7611A

Notice of Intended Action was published in the Iowa Administrative Bulletin on July 16, 1997, as ARC 7370A. In addition, these rules were simultaneously Adopted and Filed Emergency as ARC 7371A. A public hearing was held Wednesday, August 6, 1997. Comments were received. Changes to the rules as filed have been made to reflect comments from the hearing and subsequent review of federal regulations and guidelines.

The changes are as follows. In order to clarify the specific changes in the large group health insurance market, a separate division has been created in Chapter 35 for rules related to federal law. Because of the need to articulate this requirement, definitions were added to the chapter specifically for the new health care changes. Rule 35.22(509) has been changed and broken down into separate rules (35.23(509) to 35.29(509)) to provide for more information and easier reading.

Additional rules (71.15(513B) to 71.18(513B)) in the large group health insurance chapter include eligibility to enroll, "special enrollment" requirements, group health insurance coverage policy requirements, methods of counting creditable coverage, certificates of creditable coverage, and notification requirements.

Item 2 of the Notice of Intended Action, which rescinded subrule 36.4(8), has been changed; the subrule has been adopted back into the rules. This subrule on preexisting conditions was removed in error.

Word changes and punctuation corrections have been made in Items 3 through 22 of the amendments. Additional language (subrules 71.1(1) and 71.1(2)) has been added to rule 71.1(513B) to clarify the availability and renewability of small group health insurance coverage. Item 23, which adopts subrule 71.14(4), clarifies that chiropractic coverage is provided in the small group basic health care plan. This is a change from the Notice, in which subrule 71.14(4) was rescinded. This change in the individual health care plan has also been made in Item 25. Instead of rescinding subrule 75.10(3), the subrule has been adopted to state that chiropractic coverage is provided.

Any changes in the remaining items are also word and punctuation changes for clarification and are not substantive in nature.

These amendments bring Iowa into conformance with federal law on health insurance reform along with providing coverage requirements in the basic and standard health care plans.

These amendments will become effective on December 10, 1997, at which time the Adopted and Filed Emergency amendments are hereby rescinded.

These amendments are intended to implement 1995 Iowa Acts, chapter 204, section 14, 1996 Iowa Acts, chapter 1219, section 52 and 1997 Iowa Acts, House File 701.

The following amendments are adopted.

ITEM 1. Amend 191--Chapter 35 by adding the following division heading immediately before rule 191-- 35.22(509) as follows:

191--35.22(509) Purpose. This division of Chapter 35 implements the requirements of Pub. L. 104-191, the Health Insurance Portability and Accountability Act of 1996 and Iowa Code section 509.3 for large group health insurance coverage.

ITEM 3. Amend 191--Chapter 35 by adding the following new rules:

191--35.23(509) Definitions.

"Affiliation period" means a period of time that must expire before health insurance coverage provided by an HMO becomes effective, and during which the HMO is not required to provide benefits.

"Beneficiary" has the meaning given the term under Section 3(8) of the Employee Retirement Income Security Act of 1974 (ERISA), which states, "a person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit" under the plan.

"Bona fide association" means, with respect to group health insurance coverage offered in Iowa, an association that meets the following conditions:

1. Has been actively in existence for at least five years.

2. Has been formed and maintained in good faith for purposes other than obtaining insurance.

3. Does not condition membership in the association on any health status-related factor relating to an individual including an employee of an employer or a dependent of any employee.

4. Makes health insurance coverage offered through the association available to all members regardless of any health status-related factor relating to the members or individuals eligible for coverage through a member.

5. Does not make health insurance coverage offered through the association available other than in connection with a member of the association.

"Carrier" means an entity subject to the insurance laws and regulations of this state, or subject to the jurisdiction of the commissioner, that contracts or offers to contract to provide, deliver, arrange for, pay for, or reimburse any of the costs of health care services, including an insurance company offering sickness and accident plans, a health maintenance organization, a nonprofit health service corporation, or any other entity providing a plan of health insurance, health benefits or health services.

"COBRA" means Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

"Commissioner" means the commissioner of insurance.

"Continuation coverage" means coverage under aCOBRA continuation provision or a similar state program. Coverage provided by a plan that is subject to a COBRA continuation provision or similar state program, but that does not satisfy all the requirements of that provision or program, will be deemed to be continuation coverage if it allows an individual to elect to continue coverage for a period of at least 18 months. Continuation coverage does not include coverage under a conversion policy required to be offered to an individual upon exhaustion of continuation coverage, nor does it include continuation coverage under the Federal Employees Health Benefits Program.

"Creditable coverage" means health benefits or coverage provided to an individual under any of the following:

1. A group health plan.

2. Health insurance coverage.

3. Part A or Part B Medicare pursuant to Title XVIII of the federal Social Security Act.

4. Medicaid pursuant to Title XIX of the federal Social Security Act, other than coverage consisting solely of benefits under Section 1928 of that Act.

5. 10 U.S.C. ch. 55.

6. A health or medical care program provided through the Indian Health Service or a tribal organization.

7. A state health benefits risk pool.

8. A health plan offered under 5 U.S.C. ch. 89.

9. A public health plan as defined under federal regulations.

10. A health benefit plan under Section 5(e) of the Peace Corps Act, 22 U.S.C. 2504(e).

11. An organized delivery system licensed by the director of public health.

12. A short-term limited durational policy.

"Director" means the director of public health appointed pursuant to Iowa Code section 135.2.

"Division" means the division of insurance.

"Eligible employee" means an individual who is eligible to enroll in group health insurance coverage offered to a group health plan maintained by an employer, in accordance with the terms of the group health plan.

"Employee" means any individual employed by an employer.

"Enrollment date" means the first day of coverage or, if there is a waiting period, the first day of the waiting period.

"Exhaustion of continuation coverage" means that an individual's continuation coverage ceases for any reason other than either failure of the individual to pay premiums on a timely basis, or for cause such as making a fraudulent claim or an intentional misrepresentation of a material fact in connection with the plan. An individual is considered to have exhausted continuation coverage if:

1. Coverage ceases due to the failure of the employer or other responsible entity to remit premiums on a timely basis, or

2. When the individual no longer resides, lives, or works in a service area of an HMO or similar program, whether or not within the choice of the individual, and there is no other continuation coverage available to the individual.

"Group health plan" means an employee welfare benefit plan as defined in Section 3(1) of the federal Employee Retirement Income Security Act of 1974, to the extent that the plan provides medical care including items and services paid for as medical care to employees or their dependents as defined under the terms of the plan directly or through insurance, reimbursement, or otherwise.

1. For purposes of this rule, "medical care" means amounts paid for any of the following:

* The diagnosis, cure, mitigation, treatment, or prevention of disease, or amounts paid for the purpose of affecting a structure or function of the body.

* Transportation primarily for and essential to medical care referred to in this definition.

* Insurance covering medical care referred to in this definition.

2. For purposes of this division, a plan, fund, or program established or maintained by a partnership which, but for this paragraph, would not be an employee welfare benefit plan, shall be treated as an employee welfare benefit plan which is a group health plan to the extent that the plan, fund, or program provides medical care, including items and services paid for as medical care, for present or former partners in the partnership or to the dependents of such partners, as defined under the terms of the plan, fund, or program, either directly or through insurance, reimbursement, or otherwise.

3. With respect to a group health plan, the term "employer" includes a partnership with respect to a partner.

4. With respect to a group health plan the term "participant" includes the following:

* With respect to a group health plan maintained by a partnership, an individual who is a partner in the partnership.

* With respect to a group health plan maintained by a self-employed individual, under which one or more of the self-employed individual's employees are participants, the self-employed individual, if that individual is, or may become, eligible to receive benefits under the plan or the individual's dependents may be eligible to receive benefits under the plan.

"Health insurance coverage" or "health insurance plan" means benefits consisting of health care provided directly, through insurance or reimbursement, or otherwise and including items and services paid for as health care under a hospital or health service policy or certificate, hospital or health service plan contract, or health maintenance organization contract offered by a carrier.

1. "Health insurance coverage" does not include any of the following:

* Coverage for accident only, or disability income insurance.

* Coverage issued as a supplement to liability insurance.

* Liability insurance, including general liability insurance and automobile liability insurance.

* Workers' compensation or similar insurance.

* Automobile medical payment insurance.

* Credit-only insurance.

* Coverage for on-site medical clinic care.

* Other similar insurance coverage, specified in federal regulations, under which benefits for medical care are secondary or incidental to other insurance benefits.

* Flexible spending accounts.

2. "Health insurance coverage" does not include benefits provided under a separate policy as follows:

* Limited scope dental or vision benefits.

* Benefits for long-term care, nursing home care, home health care, or community-based care.

* Short-term limited durational insurance.

* Any other similar, limited benefits as provided by rule of the commissioner.

* Stop loss insurance coverage.

3. "Health insurance coverage" does not include benefits offered as independent noncoordinated benefits as follows:

* Coverage only for a specified disease or illness;

* Hospital indemnity or other fixed indemnity insurance.

4. "Health insurance coverage" does not include Medicare supplemental health insurance as defined under Section 1882(g)(1) of the federal Social Security Act, coverage supplemental to the coverage provided under 10 U.S.C. ch. 55, and similar supplemental coverage provided under insurance coverage.

5. "Group health insurance coverage" means health insurance coverage offered in connection with a group health plan.

"Health maintenance organization" or "HMO" means a federally qualified health maintenance organization as defined in Section 1301(a) of the Public Health Services Act or an organization licensed under Iowa Code section 514B.5.

"Large employer" means an employer employing two or more employees and which does not meet the definition of small employer under Iowa Code section 513B.2(16).

"Late enrollee" means an individual, other than one who enrolls during a special enrollment period, who enrolls under a health benefit plan or health insurance coverage in connection with which it is issued, other than during the first period in which the individual is eligible to enroll under terms of the health benefit plan or health insurance coverage.

"Network plan" means health insurance coverage of a health insurance issuer under which the financing and delivery of medical care including items and services paid for as medical care are provided, in whole or in part, through a defined set of providers under contract with the carrier.

"Organized delivery system" or "ODS" means an organized delivery system licensed by the director.

"Plan year" means the year that is designated as the plan year in the plan document of a group health plan, except that if the plan document does not designate a plan year or if there is no plan document, the plan year is:

1. The deductible/limit year used under the plan.

2. If the plan does not impose deductibles or limits on a yearly basis, the plan year is the policy year.

3. If the plan does not impose deductibles or limits on a yearly basis, and either the plan is not insured or the insurance policy is not renewed on an annual basis, the plan year is the employer's taxable year.

"Preexisting condition exclusion" means, with respect to health insurance coverage, a limitation or exclusion of benefits relating to a condition based on the fact that the condition was present before the date of enrollment for such coverage, whether or not any medical advice, diagnosis, care, or treatment was recommended or received before such date. A preexisting condition exclusion includes any exclusion applicable to an individual as a result of information that is obtained relating to an individual's health status before the individual's first day of coverage, such as a condition identified as a result of a preenrollment questionnaire or physical examination given to the individual, or review of medical records relating to the preenrollment period.

"Short-term limited duration insurance" means health insurance coverage provided under a contract with a carrier that has an expiration date specified in the contract, taking into account any extensions that may be elected by the policyholder without the carrier's consent, that is, within 12 months of the date the contract becomes effective.

"Significant break in coverage" means a period of 63 consecutive days during all of which the individual does not have any creditable coverage, except that neither a waiting period nor an affiliation period is taken into account in determining a significant break in coverage.

"Special enrollment period" means a period other than the first period in which an eligible employee or a dependent is eligible to enroll under the terms of group health insurance coverage in connection with which it is issued, without regard to other enrollment periods defined under the health insurance coverage.

"Waiting period" means, with respect to group health insurance coverage and an eligible employee or a dependent who is potentially eligible for coverage under the plan, the period that must pass with respect to the individual plan before the individual is eligible to be covered for benefits under the terms of the plan.

191--35.24(509) Eligibility to enroll.

35.24(1) A carrier or an organized delivery system offering group health insurance coverage shall not establish rules for eligibility, including continued eligibility, of an individual to enroll under the terms of the coverage based on any of the following health status-related factors in relation to the individual or a dependent of the individual:

a. Health status.

b. Medical condition, including both physical and mental conditions.

c. Claims experience.

d. Receipt of health care.

e. Medical history.

f. Genetic information.

g. Evidence of insurability, including conditions arising out of acts of domestic violence.

h. Disability.

35.24(2) Subrule 35.24(1) does not require group health insurance coverage to provide particular benefits other than those provided under the terms of the coverage, and does not prevent a coverage from establishing limitations or restrictions on the amount, level, extent, or nature of the benefits or coverage for similarly situated individuals enrolled in the coverage.

35.24(3) Rules for eligibility to enroll under group health insurance coverage include rules defining any applicable waiting or affiliation periods for such enrollment.

35.24(4) A carrier or organized delivery system offering health insurance coverage shall not require an individual, as a condition of enrollment or continued enrollment under the coverage, to pay a premium or contribution which is greater than a premium or contribution for a similarly situated individual enrolled in the coverage on the basis of a health status-related factor in relation to the individual or to a dependent of an individual enrolled under the coverage. This subrule shall not be construed to do either of the following:

a. Restrict the amount that an employer may be charged for health insurance coverage.

b. Prevent a carrier or organized delivery system offering group health insurance coverage from establishing premium discounts or rebates or modifying otherwise applicable copayments or deductibles in return for adherence to programs of health promotion and disease prevention.

35.24(5) A carrier or organized delivery system shall not modify a health insurance coverage with respect to an employer or any eligible employee or dependent through riders, endorsements or other means, to restrict or exclude coverage or benefits for specific diseases, medical conditions, or services otherwise covered by the health insurance coverage.

191--35.25(509) Special enrollments.

35.25(1) A carrier or organized delivery system shall permit individuals to enroll for coverage under terms of a health benefit plan, without regard to other enrollment dates permitted under the group health insurance coverage, if an eligible employee requests enrollment or, if the group health insurance coverage makes coverage available to dependents, on behalf of a dependent who is eligible but not enrolled under the group health insurance coverage, during the special enrollment period, which shall be 30 days following an event described in subrules 35.25(2) or 35.25(3) with respect to the individual for whom enrollment is requested. A carrier or organized delivery system may impose enrollment requirements that are otherwise applicable under terms of the group health insurance coverage to individuals requesting immediate enrollment.

35.25(2) An individual, who previously had other coverage for medical care and for whom an eligible employee declined coverage under the group health insurance coverage, may be enrolled during a special enrollment period if the individual has lost the other coverage for medical care and:

a. If required by the group health insurance coverage, the eligible employee stated in writing when declining the coverage, after being given a notice of the requirement form, and the consequences of failure to submit a written statement that coverage was declined because the individual had coverage for medical care under another group health insurance coverage, group health plan, or otherwise; and

b. When enrollment was declined for the individual:

(1) The individual had coverage under a COBRA continuation provision and the coverage has been exhausted; or

(2) The individual had coverage other than under aCOBRA continuation provision and the coverage has been terminated due to loss of eligibility for the coverage, including loss of coverage as a result of legal separation, divorce, death, termination of employment, reduction in the number of hours of employment and any loss of eligibility after a period that is measured by reference to any of the foregoing, or termination of employer contributions toward the other coverage.

c. For purposes of subparagraph 35.25(2)"b"(2):

(1) Loss of eligibility for the coverages does not include loss of eligibility due to the eligible employee's or dependent's failure to make timely premium payments or termination of coverage for cause such as making a fraudulent claim or intentional misrepresentation of material fact in connection with the group health insurance coverage; and

(2) Employer contributions include contributions by any current or former employer of the individual or another person that was contributing to coverage for the individual.

(3) Exhaustion of COBRA continuation coverage means that an individual's COBRA continuation coverage ceases for any reason other than either failure of the individual to pay premiums on a timely basis, or for cause, such as making a fraudulent claim or an intentional misrepresentation of a material fact in connection with the plan. An individual is considered to have exhausted COBRA continuation coverage if the coverage ceases.

35.25(3) If the eligible employee has previously declined enrollment under the group health insurance coverage but acquires a dependent through marriage, birth, adoption or placement for adoption, the eligible employee or dependent may be enrolled during the special enrollment period with respect to the individual.

35.25(4) Enrollment of the eligible employee or dependent is effective not later than the first day of the calendar month or, for a newborn or adopted child, on the date of birth, adoption, or placement for adoption.

191--35.26(509) Group health insurance coverage policy requirements.

35.26(1) Group health insurance coverage subject to the rules in this division is renewable with respect to all eligible employees or their dependents at the option of the employer, except for one or more of the following reasons:

a. The health insurance coverage sponsor fails to pay or to make timely payments of premiums or contributions pursuant to the terms of the health insurance coverage.

b. The health insurance coverage sponsors, performs an act or practice constituting fraud or makes an intentional misrepresentation of a material fact under the terms of the coverage.

c. Noncompliance with the carrier's or organized delivery system's minimum participation requirements or employer contribution requirements.

d. For a network plan, no enrollees connected to the plan live, reside, or work in the service area of the issuer.

e. A carrier or ODS may choose to discontinue offering and cease to renew a particular type of health insurance coverage in the large group market if the carrier does all of the following:

(1) Provides advance notice of its decision to discontinue the plan to the commissioner or director a minimum of three days prior to the notice for affected employers, participants, and beneficiaries.

(2) Provides notice of its decision not to renew a plan to all affected employers, participants, and beneficiaries no less than 90 days prior to nonrenewal of a plan.

(3) Offers to each plan sponsor of the discontinued coverage the option to purchase any other coverage currently offered by the carrier or ODS to other employers in this state.

(4) Acts uniformly, in opting to discontinue the cover-age and in offering the option under subparagraph 35.26(1)"e"(3), without regard to the claims experience of the sponsors under the discontinued coverage or to a health status-related factor relating to any participants or beneficiaries covered or new participants or beneficiaries who may become eligible for the coverage.

f. A decision by the carrier or ODS to discontinue offering and cease to renew all of its health insurance delivered or issued for delivery to employers in this state shall do all of the following:

(1) Provide advance notice of its decision to discontinue such coverage to the commissioner or director. Notice to the commissioner or director, at a minimum, shall be no less than three days prior to the notice provided for in subparagraph 35.26(1)"f"(2) to affected employers, participants, and beneficiaries.

(2) Provide notice of its decision not to renew such coverage to all affected employers, participants, and beneficiaries no less than 180 days prior to the nonrenewal of the coverage.

(3) Discontinue all health insurance coverage issued or delivered for issuance to employers in this state and cease renewal of such coverage.

g. The membership of an employer in a bona fide association, which is the basis for the coverage which is provided through such association, ceases, but only if the termination of coverage under this subrule occurs uniformly without regard to any health status-related factor relating to any covered individual.

h. The commissioner or director finds that the continuation of the coverage is not in the best interests of the policyholders or certificate holders, or would impair the carrier's or ODS's ability to meet its contractual obligations.

i. At the time of coverage renewal, a carrier or ODS may modify the health insurance coverage for a product offered under group health insurance coverage in the group market, if such modification is consistent with the laws of this state and is effective on a uniform basis among group health insurance coverage with that product.

35.26(2) A carrier or ODS that elects not to renew health insurance coverage under 35.26(1)"f" shall not write any new business in the group market in this state for a period of five years after the date of notice to the commissioner or director.

35.26(3) This rule applies only to a carrier or ODS doing business in one established geographic service area of the state and the carrier's or ODS's operations in that service area.

35.26(4) Preexisting condition exclusions.

a. A carrier or ODS, with respect to a participant or beneficiary, may impose a preexisting condition exclusion only as follows:

(1) The exclusion relates to a condition, whether physical or mental, regardless of the cause of the condition, for which medical advice, diagnosis, care, or treatment was recommended or received within the six-month period ending on the enrollment date. However, genetic information shall not be treated as a condition under this subparagraph in the absence of a diagnosis of the condition related to such information.

(2) The exclusion extends for a period of not more than 12 months, or 18 months in the case of a late enrollee, after the enrollment date.

(3) The period of any such preexisting condition exclusion is reduced by the aggregate of the periods of creditable coverage applicable to the participant or beneficiary as of the enrollment date.

b. A carrier or ODS offering group health insurance coverage shall not impose any preexisting condition as follows:

(1) In the case of a child who is adopted or placed for adoption before attaining 18 years of age and who, as of the last day of the 30-day period beginning on the date of the adoption or placement for adoption, is covered under creditable coverage. This subparagraph shall not apply to coverage before the date of such adoption or placement for adoption.

(2) In the case of an individual who, as of the last day of the 30-day period beginning with the date of birth, is covered under creditable coverage.

(3) Relating to pregnancy as a preexisting condition.

c. A carrier or ODS shall waive any waiting period applicable to a preexisting condition exclusion or limitation period with respect to particular services under health insurance coverage for the period of time an individual was covered by creditable coverage, provided that the creditable coverage was continuous to a date not more than 63 days prior to the effective date of the new coverage. Any period that an individual is in a waiting period for any coverage under group health insurance coverage, or is in an affiliation period, shall not be taken into account in determining the period of continuous coverage. A health maintenance organization that does not use preexisting condition limitations in any of its health insurance coverage may impose an affiliation period. For purposes of this paragraph, "affiliation period" means a period of time not to exceed 60 days for new entrants and not to exceed 90 days for late enrollees during which no premium shall be collected and coverage issued is not effective, so long as the affiliation period is applied uniformly, without regard to any health status-related factors.

d. A group health plan, carrier, or ODS offering group health insurance under the plan may not impose a preexisting condition exclusion with respect to a participant or dependent of the participant before notifying the participant under rule 35.29(509).

191--35.27(509) Methods of counting creditable coverage.

35.27(1) For purposes of reducing any preexisting condition exclusion period, a group health plan, carrier, or ODS offering group health insurance coverage shall determine the amount of an individual's creditable coverage by using the standard method described in paragraph 35.27(1)"a," except that the plan, carrier or ODS may use the alternative method under paragraph 35.27(1)"b" with respect to any or all of the categories of benefits described under paragraph 35.27(1)"d."

a. Under the standard method, a group health plan, health insurance carrier, or an ODS offering group health insurance coverage shall determine the amount of creditable coverage without regard to the specific benefits included in the coverage.

(1) For purposes of reducing the preexisting condition exclusion period, a group health plan, health insurance carrier, or an ODS offering group health insurance coverage shall determine the amount of creditable coverage by counting all the days that the individual has under one or more types of creditable coverage. If on a particular day, an individual has creditable coverage from more than one source, all the creditable coverage on that day is counted as one day. Further, any days in a waiting period for a plan or policy are not creditable coverage under the plan or policy.

(2) Days of creditable coverage that occur before a significant break in coverage are not required to be counted.

(3) Notwithstanding any other provisions of paragraph 35.27(1)"b," for purposes of reducing a preexisting condition exclusion period, a group health plan, a health insurance carrier, or an ODS offering group health insurance coverage may determine the amount of creditable coverage in any other manner that is at least as favorable to the individual as the method set forth in paragraph 35.27(1)"b."

b. Under the alternative method, a group health plan, a health insurance carrier, or an ODS offering group health insurance coverage shall determine the amount of creditable coverage based on coverage within any category of benefits described in paragraph 35.27(1)"d" and not based on coverage. The plan may apply a different preexisting condition exclusion period with respect to each category and may apply a different preexisting condition exclusion period for benefits that are not within any category. The creditable coverage determined for a category of benefits applies only for purposes of reducing the preexisting condition exclusion period with respect to that category. An individual's creditable coverage for benefits that are not within any category for which the alternative method is being used is determined under the standard method of paragraph 35.27(1)"a."

c. A plan, carrier, or ODS using the alternative method is required to apply it uniformly to all participants and beneficiaries in the plan or policy. The use of the alternative method must be set forth in the plan.

d. The alternative method for counting creditable coverage may be used for coverage for any of the following categories of benefits:

(1) Mental health.

(2) Substance abuse treatment.

(3) Prescription drugs.

(4) Dental care.

(5) Vision care.

e. If the alternative method is used, the plan is required to:

(1) State prominently that the plan is using the alternative method of counting creditable coverage in disclosure statements concerning the plan, and state this to each enrollee at the time of enrollment under the plan;

(2) Include in these statements a description of the effect of using the alternative method, including an identification of the category's uses; and

(3) Count creditable coverage within a category if any level of benefits is provided within the category.

191--35.28(509) Certificates of creditable coverage.

35.28(1) Group health plans, carriers, or ODSs shall issue certificates of creditable coverage to persons losing coverage. A group health plan, carrier, or ODS required to provide a certificate under this rule for an individual is deemed to have satisfied the certification requirements for that individual if another party provides the certificate, but only to the extent that information relating to the individual's creditable coverage and waiting or affiliation period is provided by the other party. Certificates shall be issued within a reasonable amount of time following termination to employees and dependents:

a. Automatically upon the termination of an individual's group coverage;

b. Automatically upon the termination of COBRA coverage;

c. Upon request within 24 months after coverage ends.

35.28(2) Certificates in writing. Certificates of coverage must be in writing unless all of the following conditions are met:

a. The individual requesting the certificate is not entitled to receive a certificate;

b. The individual requests that the certificate be sent to another plan, carrier, or ODS;

c. The plan, carrier, or ODS receiving the certificate agrees to accept the information through means other than a written certificate;

d. The plan or carrier receiving the certificate receives the certificate within a reasonable amount of time.

35.28(3) Required information. The certificate shall include the following information:

a. The date the certificate is issued;

b. The name of the group plan providing coverage;

c. The name of the employee or dependent to whom the certificate applies, other relevant identifying information, and the name of the employee if the certificate is for a dependent;

d. The plan administrator's name, address and telephone number;

e. A telephone number to call for further information if different from above;

f. Either a statement that the person has at least 18 months' creditable coverage without a significant break of coverage or the date any waiting period and creditable coverage began;

g. The date creditable coverage ended or an indication that the coverage is in force.

35.28(4) Family information. Information for families may be combined on one certificate. Any differences in creditable coverages shall be clearly delineated.

35.28(5) Dependent coverage transition rule. A group health plan, carrier, or ODS that does not maintain dependent data is deemed to have satisfied the requirement to issue dependent certificates by naming the employee and specifying that the coverage on the certificate is for dependent coverage.

35.28(6) Delivering certificates. The certificate shall be given to the individual, plan, carrier, or ODS requesting the certificate. The certificates may be sent by first-class mail. When a dependent's last-known address differs from the employee's last-known address, a separate certificate shall be provided to the dependent at the dependent's last-known address. Separate certificates may be mailed together to the same location.

35.28(7) A group health plan, carrier, or ODS shall establish a procedure for individuals to request and receive certificates.

35.28(8) A certificate is not required to be furnished until the group health plan, carrier, or ODS knows or should have known that dependent's coverage terminated.

35.28(9) Demonstrating creditable coverage. An individual has the right to demonstrate creditable coverage, waiting periods, and affiliation periods when the accuracy of the certificate is contested or a certificate is unavailable. A group health plan, carrier, or ODS shall consider information obtained by it or presented on behalf of an individual to determine whether the individual has creditable coverage.

191--35.29(509) Notification requirements.

35.29(1) A group health plan, carrier, or ODS shall provide written notice to the employee and dependents that includes the following:

a. The existence of any preexisting condition exclusions.

b. A determination that the group health plan, carrier, or ODS intends to impose a preexisting condition exclusion and:

(1) The basis for the decision to do so;

(2) The length of time to which the exclusion will apply;

(3) The right of the employee or dependent to appeal a decision to impose a preexisting condition exclusion;

(4) The right of the person to demonstrate creditable coverage including the right of the person to request a certificate from a prior group health plan, carrier, or ODS and a statement that the current group health plan, carrier, or ODS will assist in obtaining the certificate.

c. That the group health plan, carrier, or ODS will use the alternative method of counting creditable coverage.

d. Special enrollment rights when an employee declines coverage for the employee or dependents.

35.29(2) A group health plan, carrier, or ODS shall provide written notice to the employee and dependents of a modification of a prior creditable coverage decision when the group health plan, carrier, or ODS subsequently determines either no or less creditable coverage existed provided that the group health plan, carrier, or ODS acts according to its initial determination until the final determination is made.

ITEM 4. Amend rule 191--36.4(514D) by adopting the following subrule:

36.4(8) "Preexisting condition" shall not be defined to be more restrictive than the following: Preexisting condition means the existence of symptoms which would cause an ordinary prudent person to seek diagnosis, care or treatment within a five-year period preceding the effective date of the coverage of the insured person or a condition for which medical advice or treatment was recommended by a physician or received from a physician within a five-year period preceding the effective date of the insured person.

ITEM 5. Amend rule 191--71.1(513B) to read as follows:

191--71.1(513B) Purpose. This chapter is intended to implement the provisions of Iowa Code chapter 513B to provide for the availability of health insurance coverage to small employers guaranteed issue of all health insurance products in the small group market, regardless of their health status or claims experience; to regulate insurer rating practices and establish limits on differences in rates between health benefit plans health insurance coverages; to ensure renewability of coverage; to establish limitations on underwriting practices, eligibility requirements and the use of preexisting condition exclusions; to provide for development of "basic" and "standard" health insurance plans to be offered to all small employers; to provide for establishment of a reinsurance program; to direct the basis of market competition away from risk selection and toward the efficient management of health care; to improve the overall fairness and efficiency of the small group health insurance market and to promote broader spreading of risk in the small employer marketplace. Carriers and ODSs that provide basic and standard health benefit plans, as herein set forth, to small employers are intended to be subject to all provisions of Iowa Code chapter 513B and this chapter of rules.

71.1(1) Health insurance coverage subject to this chapter is available or renewable with respect to all eligible employees or their dependents, at the option of the employer, except for reasons set forth in Iowa Code section 513B.5.

71.1(2) A carrier or organized delivery system subject to this chapter is required to guarantee issue small employer plans except for reasons set forth in Iowa Code chapter 513B.

ITEM 6. Amend rule 191--71.2(513B), definition of "New entrant," as follows:

"New entrant" means an eligible employee, or the dependent of an eligible employee, who becomes part of an employer group after the initial period for enrollment in a health benefit plan insurance coverage.

ITEM 7. Amend rule 191--71.2(513B) by adding the following new definitions in alphabetical order:

"Beneficiary" has the meaning given the term under Section 3(8) of the Employee Retirement Income Security Act of 1974 (ERISA), which states, "a person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit" under the plan.

"Bona fide association" means, with respect to group health insurance coverage offered in Iowa, an association that meets the following conditions:

1. Has been actively in existence for at least five years.

2. Has been formed and maintained in good faith for purposes other than obtaining insurance.

3. Does not condition membership in the association on any health status-related factor relating to an individual including an employee of an employer or a dependent of any employee.

4. Makes health insurance coverage offered through the association available to all members regardless of any health status-related factor relating to the members or individuals eligible for coverage through a member.

5. Does not make health insurance coverage offered through the association available other than in connection with a member of the association.

"COBRA" means Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

"Continuation coverage" means coverage under aCOBRA continuation provision or a similar state program. Coverage provided by a plan that is subject to a COBRA continuation provision or similar state program, but that does not satisfy all the requirements of that provision or program, will be deemed to be continuation coverage if it allows an individual to elect to continue coverage for a period of at least 18 months. Continuation coverage does not include coverage under a conversion policy required to be offered to an individual upon exhaustion of continuation coverage, nor does it include continuation coverage under the Federal Employees Health Benefits Program.

"Creditable coverage" includes short-term limited duration insurance.

"Director" means the director of public health appointed pursuant to Iowa Code section 135.2.

"Employee" means any individual employed by an employer.

"Enrollment date" means the first day of coverage or, if there is a waiting period, the first day of the waiting period.

"Exhaustion of continuation coverage" means that an individual's continuation coverage ceases for any reason other than either failure of the individual to pay premiums on a timely basis, or for cause such as making a fraudulent claim or an intentional misrepresentation of a material fact in connection with the plan. An individual is considered to have exhausted continuation coverage if:

1. Coverage ceases due to the failure of the employer or other responsible entity to remit premiums on a timely basis, or

2. When the individual no longer resides, lives, or works in a service area of an HMO or similar program, whether or not within the choice of the individual, and there is no other continuation coverage available to the individual.

"Health insurance coverage" does not include the following:

1. Flexible spending accounts.

2. Short-term limited duration insurance.

3. Stop loss insurance coverage.

"Health maintenance organization" or "HMO" means a federally qualified health maintenance organization as defined in Section 1301(a) of the Public Health Services Act or an organization licensed under Iowa Code section 514.5.

"Late enrollee" means an individual, other than one who enrolls during a special enrollment period, who enrolls under a health benefit plan or health insurance coverage in connection with which it is issued, other than during the first period in which the individual is eligible to enroll under terms of the health benefit plan or group health plan.

"Network plan" means health insurance coverage of a health insurance issuer under which the financing and delivery of medical care including items and services paid for as medical care are provided, in whole or in part, through a defined set of providers under contract with the carrier.

"Organized delivery system" or "ODS" means an organized delivery system licensed by the director.

"Plan year" means the year that is designated as the plan year in the plan document of a group health plan, except that if the plan document does not designate a plan year or if there is no plan document, the plan year is:

1. The deductible/limit year used under the plan.

2. If the plan does not impose deductibles or limits on a yearly basis, the plan year is the policy year.

3. If the plan does not impose deductibles or limits on a yearly basis, and either the plan is not insured or the insurance policy is not renewed on an annual basis, the plan year is the employer's taxable year.

"Preexisting condition exclusion" means, with respect to health insurance coverage, a limitation or exclusion of benefits relating to a condition based on the fact that the condition was present before the date of enrollment for such coverage, whether or not any medical advice, diagnosis, care, or treatment was recommended or received before such date. A preexisting condition exclusion includes any exclusion applicable to an individual as a result of information that is obtained relating to an individual's health status before the individual's first day of coverage, such as a condition identified as a result of a preenrollment questionnaire or physical examination given to the individual, or review of medical records relating to the preenrollment period.

"Short-term limited duration insurance" means health insurance coverage provided under a contract with a carrier or ODS that has an expiration date specified in the contract, taking into account any extensions that may be elected by the policyholder without the carrier's or ODS's consent, that is, within 12 months of the date the contract becomes effective.

"Significant break in coverage" means a period of 63 consecutive days during all of which the individual does not have any creditable coverage, except that neither a waiting period nor an affiliation period is taken into account in determining a significant break in coverage.

"Special enrollment period" means a period other than the first period in which an eligible employee or a dependent is eligible to enroll under the terms of group health insurance coverage in connection with which it is issued, without regard to other enrollment periods defined under the health insurance coverage.

"Waiting period" means, with respect to group health insurance coverage and an eligible employee or a dependent who is potentially eligible for coverage under the plan, the period that must pass with respect to the individual before the individual is eligible to be covered for benefits under the terms of the plan.

ITEM 8. Amend rule 191--71.3(513B) to read as follows:

191--71.3(513B) Applicability and scope.

71.3(1) a. Except as provided herein, this chapter shall apply to any health benefit plan insurance coverage, whether provided on a group or individual basis, which:

(1) Meets one or more of the conditions set forth in Iowa Code sections 513B.3(1) to 513B.3(3);

(2) Provides coverage to one or more employees of a small employer located in this state without regard to whether the policy or certificate was issued in this state; and

(3) Is in effect on or after July 1, 1991.

b. Except as specifically provided, the provisions of Iowa Code chapter 513B and this chapter shall not apply to health insurance policies coverages delivered or issued for delivery prior to the effective date of the Act.

71.3(2) a. A carrier or ODS that provides individual health insurance policies to one or more of the employees of a small employer shall be considered a small employer carrier or ODS and subject to the provisions of Iowa Code chapter 513B and this chapter with respect to such policies if the small employer contributes, directly or indirectly, to the premiums for the policies and the carrier or ODS is aware, or should have been aware, of such contribution.

b. In the case of a carrier or ODS that provides individual health insurance policies to one or more employees of a small employer, the small employer shall be considered an eligible small employer as defined in 513B.10(1)"b"(3) as amended by 1993 Iowa Acts, chapter 80 and the small employer carrier subject to 513B.10(1)"b"(2) as amended by 1993 Iowa Acts, chapter 80 (related to guaranteed issue of coverage) if:

(1) The small employer has at least two employees;

(2) The small employer contributes, directly or indirectly, to the premiums charged by the carrier or ODS; and

(3) The carrier or ODS is aware, or should have been aware, of the contribution by the employer.

71.3(3) Iowa Code chapter 513B and this chapter shall apply to a health benefit plan insurance coverage provided to a small employer or to the employees of a small employer without regard to whether the health benefit plan insurance coverage is offered under or provided through a group policy or trust arrangement of any size sponsored by an association or discretionary group.

71.3(4) An individual health insurance policy shall not be subject to 513B and this chapter solely because the policyholder elects a business expense deduction under Section 162(1) of the Internal Revenue Code, the health benefit plan insurance coverage is treated as part of a plan or program for purposes of Section 125 of the Internal Revenue Code for which the employee makes all the contributions, the employer provides payroll deduction of health insurance premiums on behalf of an employee if the health benefit plan insurance coverage covers employees where the employer has applied for group health benefits and has received written notification that the group did not meet the small group carrier's or ODS's minimum participation or contribution standards. The individual health insurance carrier or ODS shall maintain a copy of the employer's notification from the small group carrier for insurance division audit purposes.

71.3(5) a. If a small employer is issued a health benefit plan insurance coverage under the terms of 513B, the provisions of 513B and this chapter shall continue to apply to the health benefit plan insurance coverage in the case that the small employer subsequently employs more than 50 eligible employees. A carrier or ODS providing coverage to such an employer shall, within 60 days of becoming aware that the employer has more than 50 eligible employees but no later than the anniversary date of the employer's health benefit plan insurance coverage, notify the employer that the protections provided under 513B and this chapter shall cease to apply to the employer if such employer fails to renew its current health benefit plan insurance coverage or elects to enroll in a different health benefit plan insurance coverage. It is the responsibility of the employer to notify the carrier or ODS of changes in employment levels which could change the employer's status as a small employer for the purposes of this chapter.

b. (1) If a health benefit plan insurance coverage is issued to an employer that is not a small employer as defined, but subsequently the employer becomes a small employer (due to the loss or change of work status of one or more employees), the terms of Iowa Code chapter 513B shall not apply to the health benefit plan insurance coverage. The carrier or ODS providing a health benefit plan insurance coverage to such an employer shall not become a small employer carrier or ODS under the terms of Iowa Code chapter 513B solely because the carrier or ODS continues to provide coverage under the health benefit plan insurance coverage to the employer.

(2) A carrier or ODS providing coverage to an employer described in subparagraph "b"(1) shall, within 60 days of becoming aware that the employer has 50 or fewer eligible employees, notify the employer of the options and protections available to the employer under 513B, including the employer's option to purchase a small employer health benefit plan insurance coverage from any small employer carrier or ODS. It is the responsibility of the employer to notify the carrier of changes in employment levels which could change the employer's status as a small employer for the purposes of this chapter.

71.3(6) a. (1) If a small employer has employees in more than one state, Iowa Code chapter 513B and this chapter shall apply to a health benefit plan insurance coverage issued to the small employer if:

1. The majority of eligible employees of such small employer are employed in this state; or

2. The If no state contains a majority of the eligible employees of the small employer, the primary business location of the small employer is in this state.

(2) In determining whether the laws of this state or another state apply to a health benefit plan insurance coverage issued to a small employer described in subparagraph (1), the provisions of the paragraph shall be applied as of the date the health benefit plan insurance coverage was issued to the small employer for the period that the health benefit plan insurance coverage remains in effect.

b. If a health benefit plan insurance coverage is subject to Iowa Code chapter 513B and this chapter, the provisions of 513B and those set forth herein shall apply to all individuals covered under the health benefit plan insurance coverage whether they reside in this state or in another state.

71.3(7) A carrier or ODS that is not operating as a small employer carrier or ODS in this state shall not become subject to the provisions of the Act and this regulation solely because a small employer that was issued a health benefit plan insurance coverage in another state by that carrier or ODS moves to this state.

ITEM 9. Amend rule 191--71.4(513B) to read as follows:

191--71.4(513B) Establishment of classes of business.

71.4(1) A small employer carrier or ODS that establishes more than one class of business as defined in Iowa Code section 513B.2 shall maintain on file for inspection by the commissioner the following information with respect to each class of business so established:

a. A description of each criterion employed by the carrier (or any of its agents) for determining membership in the class of business;

b. A statement describing the justification for establishing the class as a separate class of business and documentation that the establishment of the class of business is intended to reflect substantial differences in expected claims experience or administrative costs related to the reasons as set forth in the definition of "class of business" in Iowa Code section 513B.2;

c. A statement disclosing which, if any, health benefit plans insurance coverages are currently available for purchase in the class and any significant limitations related to the purchase of such plans.

71.4(2) A carrier or ODS may not directly or indirectly use group size as a criterion for establishing eligibility for a health benefit plan insurance coverage or for a class of business.

ITEM 10. Amend rule 191--71.5(513B) to read as follows:

191--71.5(513B) Transition for assumptions of business from another carrier.

71.5(1) a. A small employer carrier or ODS shall not transfer or assume the entire insurance obligation or risk of health benefit plan insurance coverage covering a small employer in this state unless:

(1) The transaction has been approved by the commissioner of the state of domicile of the assuming carrier or ODS;

(2) The transaction has been approved by the commissioner of the state of domicile of the ceding carrier or ODS; and

(3) The transaction otherwise meets the requirements of this rule and 513B.3(4)"c."

b. A carrier or ODS domiciled in this state that proposes to assume or cede the entire insurance obligation or risk of one or more small employer health benefit plans from another carrier or ODS shall make a filing for approval with the commissioner at least 60 days prior to the date of the proposed assumption. The commissioner may approve the transaction upon a finding that the transaction is in the best interests of the individuals insured under the health benefit plans insurance coverages to be transferred and is consistent with the purposes of Iowa Code chapter 513B and this chapter. The commissioner shall not approve the transaction until at least 30 days after the date of the filing except that, if the ceding carrier or ODS is in hazardous financial condition, the commissioner may approve the transaction as soon as the commissioner deems reasonable after the filing.

c. (1) The filing required under paragraph 71.5(1)"b" shall:

1. Describe the class of business (including any eligibility requirements) of the ceding carrier or ODS from which the health benefit plan insurance coverage will be ceded;

2. Describe whether the assuming carrier or ODS will maintain the assumed health benefit plans insurance coverage as a separate class of business (pursuant to 71.5(3)) or will incorporate them into an existing class of business (pursuant to 71.5(4)). If the assumed health benefit plans insurance coverage will be incorporated into an existing class of business, the filing shall describe the class of business of the assuming carrier or ODS into which the health benefit plans insurance coverages will be incorporated;

3. Describe whether the health benefit plans insurance coverages being assumed are currently available for purchase by small employers;

4. Describe the potential effect of the assumption (if any) on the benefits provided by the health benefit plans insurance coverages to be assumed;

5. Describe the potential effect of the assumption (if any) on the premiums for the health benefit plans insurance coverages to be assumed;

6. Describe any other potential material effects of the assumption on the coverage provided to the small employers covered by the health benefit plans insurance coverages to be assumed; and

7. Include any other information required by the commissioner.

(2) A small employer carrier or ODS required to make a filing under 71.5(1)"b" shall also make an informational filing with the commissioner of each state in which there are small employer benefit plans insurance coverages that would be included in the transaction. The informational filing to each state shall be made concurrently with the filing made under 71.5(1)"b" and shall include at least the information specified in 71.5(1)"c"(1) for the small employer health benefit plans insurance coverages in that state.

d. A small employer carrier or ODS shall not transfer or assume the entire insurance obligation or risk of a health benefit plan insurance coverage covering a small employer in this state unless it complies with the following provisions:

(1) The carrier or ODS has provided notice to the commissioner at least 60 days prior to the date of the proposed assumption. The notice shall contain the information specified in 71.5(1)"c" for the health benefit plans insurance coverages covering small employers in this state.

(2) If the assumption of a class of business would result in the assuming small employer carrier or ODS being out of compliance with the limitations related to premium rates contained in Iowa Code section 513B.4(1)"a," the assuming carrier or ODS shall make a filing with the commissioner pursuant to Iowa Code section 513B.17 seeking suspension of the application of 513B.4(1)"a."

(3) An assuming carrier or ODS seeking suspension of the application of 513B.4(1)"a" shall not complete the assumption of health benefit plans insurance coverages covering small employers in this state unless the commissioner grants the suspension requested pursuant to 71.5(1)"d"(2).

(4) Unless a different period is approved by the commissioner, a suspension of the application of Iowa Code paragraph 513B.4(1)"a" shall, with respect to an assumed class of business, be for no more than 15 months and, with respect to each individual small employer, last only until the anniversary date of such employer's coverage (except that the period with respect to an individual small employer may be extended beyond its first anniversary date for a period of up to 12 months if the anniversary date occurs within 3 months of the date of assumption of the class of business).

71.5(2) a. Except as provided in paragraph 71.5(1)"b," a small employer carrier or ODS shall not cede or assume the entire insurance obligation or risk for a small employer health benefit plan insurance coverage unless the transaction includes ceding to the assuming carrier or ODS the entire class of business that includes such health benefit plan insurance coverage.

b. A small employer carrier or ODS may cede less than an entire class of business to an assuming carrier if:

(1) One or more small employers in the class have exercised their right under contract or state law to reject (either directly or by implication) the ceding of their health benefit plans insurance coverage to another carrier or ODS. In that instance, the transaction shall include each health benefit plan insurance coverage in the class of business except those health benefit plans insurance coverages for which a small employer has rejected the proposed cession; or

(2) After a written request from the transferring carrier, the commissioner determines that the transfer of less than the entire class of business is in the best interests of the small employers insured in that class of business.

71.5(3) Except as provided in 71.5(4), a small employer carrier or ODS that assumes one or more health benefit plans insurance coverages from another carrier or ODS shall maintain such health benefit plans insurance coverages as a separate class of business.

71.5(4) A small employer carrier or ODS that assumes one or more health benefit plans insurance coverages from another carrier or ODS may exceed the limitation contained in Iowa Code section 513B.2 (relating to the maximum number of classes of business a carrier or ODS may establish) due solely to such assumption for a period of up to 15 months after the date of the assumption, provided that the carrier or ODS complies with the following provisions:

a. Upon assumption of the health benefit plans insurance coverages, such health benefit plans insurance coverages shall be maintained as a separate class of business. During the 15-month period following the assumption, each of the assumed small employer health benefit plans insurance coverages shall be transferred by the assuming small employer carrier or ODS into a single class of business operated by the assuming small employer carrier or ODS. The assuming small employer carrier or ODS shall select the class of business into which the assumed health benefit plans insurance coverages will be transferred in a manner that results in the least possible change to the benefits coverages and rating method of the assumed health benefit plans insurance coverages.

b. The transfers authorized in paragraph "a" shall occur, with respect to each small employer, on the anniversary date of the small employer's coverage, except that an individual small employer period may be extended beyond the first anniversary date up to 12 months if the anniversary date occurs within 3 months of the date of assumption of the class of business.

c. A small employer carrier or ODS making a transfer pursuant to paragraph "a" may alter the benefits of the assumed health benefit plans insurance coverages to conform to the benefits currently offered by the carrier in the class of business into which the health benefit plans insurance coverages have been transferred.

d. The premium rate for an assumed small employer health benefit plan insurance coverage shall not be modified by the assuming small employer carrier or ODS until the health benefit plan insurance coverage is transferred pursuant to paragraph "a." Upon transfer, the assuming small employer carrier or ODS shall calculate a new premium rate for the health benefit plan insurance coverage from the rate manual established for the class of business into which the health benefit plan insurance coverage is transferred. In making such calculation, the risk load applied to the health benefit plan insurance coverage shall be no higher than the risk load applicable to such health benefit plan insurance coverage prior to the assumption.

e. During the 15-month period provided in this subrule, the transfer of small employer health benefit plans insurance coverages from the assumed class of business in accordance with this subrule shall not be considered a violation of the first sentence of Iowa Code section 513B.4(4).

71.5(5) An assuming carrier or ODS may not apply eligibility requirements (including minimum participation and contribution requirements) with respect to an assumed health benefit plan insurance coverage (or with respect to any health benefit plan insurance coverage subsequently offered to a small employer covered by such an assumed health benefit plan insurance coverage) that are more stringent than the requirements applicable to such health benefit plan insurance coverage prior to the assumption.

71.5(6) The commissioner may approve a longer period of transition upon application of a small employer carrier or ODS. The application shall be made within 60 days after the date of assumption of the class of business and shall clearly state the justification for a longer transition period.

71.5(7) Nothing in this rule or in Iowa Code chapter 513B is intended to:

a. Reduce or diminish any legal or contractual obligation or requirement, including any obligation provided in Iowa Code chapters 521 and 521B, of the ceding or assuming carrier or ODS related to the transaction;

b. Authorize a carrier or ODS that is not admitted to transact the business of insurance in this state to offer health benefit plans insurance coverages in this state; or

c. Reduce or diminish the protections related to an assumption reinsurance transaction provided in Iowa Code chapters 521 and 521B or otherwise provided by law.

ITEM 11. Amend 71.6(1)"b"(2)"3" to read as follows:

3. A description of how the change in rating method would affect the premium rates currently charged to small employers in the class of business, including an estimate from a qualified actuary of the number of groups or individuals (and a description of the types of groups or individuals) whose premium rates may change by more than 10 percent due to the proposed change in rating method (not generally including increases in premium rates applicable to all small employers in a health benefit plan insurance coverage);

ITEM 12. Amend 71.6(1)"b"(3)"1," "2" and "3" to read as follows:

1. A change in the number of case characteristics used by a small employer carrier or ODS to determine premium rates for health benefit plans insurance coverages in a class of business;

2. A change in the manner or procedures by which insureds are assigned into categories for the purpose of applying a case characteristic to determine premium rates for health benefit plans insurance coverages in a class of business;

3. A change in the method of allocating expenses among health benefit plans insurance coverages in a class of business; or

ITEM 13. Amend subrule 71.6(2), paragraphs "c," "d," "e," "g" and "h," to read as follows:

c. A small employer carrier or ODS shall use the same case characteristics in establishing premium rates for each health benefit plan insurance coverage in a class of business and shall apply them in the same manner in establishing premium rates for each health benefit plan insurance coverage. Case characteristics shall be applied without regard to the risk characteristics of a small employer.

d. The rate manual developed pursuant to 71.6(1) shall clearly illustrate the relationship among the base premium rates charged for each health benefit plan insurance coverage in the class of business. If the new business premium rate is different than the base premium rate for a health benefit plan insurance coverage, the rate manual shall illustrate the difference.

e. Differences among base premium rates for health benefit plans insurance coverages shall be based solely on the reasonable and objective differences in the design and benefits of the health benefit plan insurance coverages and shall not be based in any way on the actual or expected health status or claims experience of the small employer groups that choose, or are expected to choose, a particular health benefit plan insurance coverage. A small employer carrier or ODS shall apply case characteristics and rate factors within a class of business in a manner that ensures that premium differences among health benefit plans insurance coverages for identical small employer groups vary only due to reasonable and objective differences in the design and benefits of the health benefit plans insurance coverages and are not due to the actual or expected health status or claims experience of the small employer groups that choose, or are expected to choose, a particular health benefit plan insurance coverage.

g. (1) Except as provided in subparagraph (2), a premium charged to a small employer for a health benefit plan insurance coverage shall not include a separate application fee, underwriting fee or any other separate fee or charge.

(2) A carrier or ODS may charge a separate fee with respect to a health benefit plan insurance coverage (but only one fee with respect to such plan) provided the fee is no more than $5 per month per employee and is applied in a uniform manner to each health benefit plan insurance coverage in a class of business.

h. A small employer carrier or ODS shall allocate administrative expenses to the basic and standard health benefit plans on no less favorable a basis than expenses are allocated to other health benefit plans insurance coverages in the class of business. The rate manual developed pursuant to 71.6(1) shall describe the method of allocating administrative expenses to the health benefit plans insurance coverages in the class of business for which the manual was developed.

ITEM 14. Amend subrule 71.6(4), paragraphs "b," "c," and "d," to read as follows:

b. (1) If, for any health benefit plan insurance coverage with respect to any rating period, the percentage change in the new business premium rate is less than or the same as the percentage change in the base premium rate, the change in the new business premium rate shall be deemed the change in the base premium rate for the purposes of 513B.4(1)"c" and 513B.4(1)"d."

(2) If, for any health benefit plan insurance coverages with respect to any rating period, the percentage change in the new business premium rate exceeds the percentage change in the base premium rate, the health benefit plan insurance coverage shall be considered a health benefit plan insurance coverage into which the small employer carrier or ODS is no longer enrolling new small employers for the purposes of 513B.4(1)"c" and 513B.4(1)"d."

c. If, for any rating period, the change in the new business premium rate for a health benefit plan insurance coverage differs from the change in the new business premium rate for any other health benefit plan insurance coverage in the same class of business by more than 20 percent, the carrier or ODS shall make a filing with the commissioner containing a complete explanation of how the respective changes in new business premium rates were established and the reason for the difference. The filing shall be made within 30 days of the beginning of the rating period.

d. A small employer carrier or ODS shall keep on file, for a period of at least six years, the calculations used to determine the change in base premium rates and new business premium rates for each health benefit plan insurance coverage for each rating period.

ITEM 15. Amend subrule 71.6(5), paragraphs "b" and "c," to read as follows:

b. In the case of a health benefit plan insurance coverage into which a small employer carrier or ODS is no longer enrolling new small employers, a change in a premium rate for a small employer shall produce a revised premium rate that is no more than the following:

(1) The base premium rate for the small employer (given its present composition and as shown in the rate manual in effect for the small employer at the beginning of the previous rating period), multiplied by

(2) One plus the lesser of:

1. The change in the base rate or

2. The percentage change in the new business premium for the most similar health benefit plan insurance coverage into which the small employer carrier or ODS is enrolling new small employers, multiplied by

(3) One plus the sum of:

1. The risk load applicable to the small employer during the previous rating period and

2. Fifteen percent (prorated for periods of less than one year).

c. In the case of a health benefit plan insurance coverage described in Iowa Code section 513B.4(2), if the current premium rate for the health benefit plan insurance coverage exceeds the ranges set forth in 513B.4(1), the formulae setforth in paragraphs "a" and "b" will be applied as if the 15percent adjustment provided in 71.6(5)"a"(2)"2" and 71.6(5)"b"(3)"2" were a zero percent adjustment.

ITEM 16. Amend subrule 71.6(6), paragraph "c," to read as follows:

c. A waiver granted under 1993 Iowa Acts, chapter 80, section 5, 513B.4A shall not apply to an individual who participates in the trust because the individual is an associate member of an employee organization or the beneficiary of such an individual.

ITEM 17. Amend 191--71.7(513B) as follows:

191--71.7(513B) Requirement to insure entire groups.

71.7(1) a. A small employer carrier or ODS that offers coverage to a small employer shall offer to provide coverage to each eligible employee and to each dependent of an eligible employee. The small employer carrier or ODS shall provide the same health benefit plan insurance coverage to each employee and dependent.

b. Except as provided in Iowa Code section 513B.10(3)(4) (with respect to exclusions for preexisting conditions), the choice among benefit plans insurance coverages may not be limited, restricted or conditioned upon the risk characteristics of the employees or their dependents.

71.7(2) a. Except as provided in this subrule, a small employer carrier or ODS may not issue a health benefit plan insurance coverage to a small employer unless the health benefit plan insurance coverage covers all eligible employees and all dependents of eligible employees.

b. A small employer carrier or ODS may issue a health benefit plan insurance coverage to a small employer that excludes an eligible employee or the dependent of an eligible employee only if:

(1) The excluded individual has coverage under a health benefit plan insurance coverage or other health benefit coverage arrangement, including that set forth in Iowa Code chapter 514E, that provides benefits coverage similar to or exceeding benefits provided under the basic health benefit plan insurance coverage;

(2) The excluded individual does not have a risk characteristic or other attribute that would cause the carrier to make a decision with respect to premiums or eligibility for a health benefit plan insurance coverage that is adverse to the small employer;

(3) The excluded individual states in a signed waiver that the individual has had coverage under a health benefit plan insurance coverage or other health benefit arrangement, including that set forth in Iowa Code chapter 514E, within the previous six months and reasonably expects to have coverage within the succeeding six months under a health benefit plan insurance coverage or other health benefit arrangement that provides benefits similar to or exceeding benefits provided under the basic health benefit plan.

c. A small employer carrier or ODS shall require each small employer that applies for coverage, as part of the application process, to provide a complete list of eligible employees and dependents of eligible employees. The small employer carrier or ODS shall require the small employer to provide appropriate supporting documentation in the form of a W-2 Summary Wage and Tax Form and federal or state quarterly withholding statements for the current year and the year immediately preceding the year of application for coverage.

(1) A small employer carrier or ODS shall secure a waiver, with respect to each eligible employee and each dependent of an eligible employee, declining an offer of coverage under a health benefit plan insurance coverage provided to a small employer. The waiver shall be signed by the eligible employee (on behalf of such employee or the dependent of such employee) and shall certify that the individual who declined coverage was informed of the availability of coverage under the health benefit plan insurance coverage. The waiver form shall require that the reason for declining coverage is stated on the form and shall include a written warning of the penalties imposed on late enrollees. Waivers shall be maintained by the small employer carrier or ODS for a period of six years.

(2) A small employer carrier or ODS shall obtain, with respect to each individual who submits a waiver under 71.7(2)"c"(1), information sufficient to establish that the waiver is permitted under 71.7(2)"b."

d. (1) A small employer carrier or ODS shall not issue coverage to a small employer if the carrier is unable toobtain the list required under 71.7(2)"c," a waiver requiredunder 71.7(2)"c"(1) or the information required under 71.7(2)"c"(2) in circumstances set forth in this subrule.

(2) 1. A small employer carrier or ODS shall not offer coverage to a small employer if the carrier or ODS, or a producer for such carrier or ODS, has reason to believe that the small employer has induced or pressured an eligible employee (or dependent of an eligible employee) to decline coverage due to the individual's risk characteristics.

2. A producer shall notify a small employer carrier or ODS, prior to submitting an application for coverage with the carrier or ODS on behalf of a small employer, of any circumstances that would indicate that the small employer has induced or pressured an eligible employee (or dependent of an eligible employee) to decline coverage due to the individual's risk characteristics.

71.7(3) a. New entrants to a small employer group shall be offered an opportunity to enroll in the health benefit plan insurance coverage currently held by such group. A new entrant that does not exercise the opportunity to enroll in the health benefit plan insurance coverage within the period provided by the small employer carrier or ODS may be treated as a late enrollee by the carrier or ODS, provided that the period provided to enroll in the health benefit plan insurance coverage extends at least 30 days after the date the new entrant is notified of the opportunity to enroll. If a small employer carrier or ODS has offered more than one health benefit plan insurance coverage to a small employer group pursuant to 71.7(1)"b," the new entrant shall be offered the same choice of health benefit plans insurance coverages as the other members of the group.

b. A small employer carrier or ODS shall not apply a waiting period, elimination period or other similar limita-tion of coverage (other than an exclusion for preexistingmedical conditions consistent with Iowa Code section 513B.10(3)(4)), with respect to a new entrant that is longer than 60 days. This subrule does not affect an employer's ability to determine an employee's probationary period of work prior to the commencement of benefits.

c. New entrants to a group shall be accepted for coverage by the small employer carrier or ODS without any restrictions or limitations on coverage related to the risk characteristics of the employees or their dependents except that a carrier may exclude coverage for preexisting medical conditions consistent with the provisions provided in 513B.10.

d. A small employer carrier or ODS may assess a risk load to the premium rate associated with a new entrant consistent with the requirements of Iowa Code section 513B.4. The risk load shall be the same risk load charged to the small employer group immediately prior to acceptance of the new entrant into the group.

71.7(4) a. (1) In the case of an eligible employee (or dependent of an eligible employee) who, prior to July 1, 1993, was excluded from coverage or denied coverage by a small employer carrier or ODS in the process of providing a health benefit plan insurance coverage to an eligible small employer (as defined in Iowa Code section 513B.2(16) as amended by 1993 Iowa Acts, chapter 80), the small employer carrier or ODS shall provide an opportunity for the eligible employee (or dependent of such eligible employee) to enroll in the health benefit plan insurance coverage currently held by the small employer.

(2) A small employer carrier or ODS may require an individual who requests enrollment under this subrule to sign a statement indicating that such individual sought coverage under the group contract (other than as a late enrollee) and that the coverage was not offered to the individual.

The opportunity to enroll shall meet the following requirements:

b. (1) The opportunity to enroll shall begin October 1, 1993, and extend for a period of at least three months.

(2) Eligible employees and dependents of eligible employees who are provided an opportunity to enroll pursuant to this subrule shall be treated as new entrants. Premium rates related to such individuals shall be set in accordance with 71.7(3).

(3) The terms of coverage offered to an individual described in subparagraph "a"(1) may exclude coverage for preexisting medical conditions if the health benefit plan insurance coverage currently held by the small employer contains such an exclusion, provided that the exclusion period shall be reduced by the number of days between the date the individual was excluded or denied coverage and the date coverage is provided to the individual pursuant to this subrule.

(4) A small employer carrier or ODS shall provide written notice at least 45 days prior to the opportunity to enroll provided in 71.7(4)"a"(1) to each small employer insured under a health benefit plan insurance coverage offered by such carrier or ODS. The notice shall clearly describe the rights granted under this subrule to employees and dependents previously excluded or denied coverage and the process for enrollment of such individuals in the employer's health benefit plan insurance coverage.

ITEM 18. Amend rule 191--71.9(513B) to read as follows:

191--71.9(513B) Application to reenter state.

71.9(1) A carrier or ODS prohibited from writing coverage for small employers in this state pursuant to Iowa Code section 513B.5(2) may not resume offering health benefit plan insurance coverage to small employers in this state until the carrier or ODS has made a petition to the commissioner or director to be reinstated as a small employer carrier or ODS and the petition has been approved by the commissioner or director. In reviewing a petition, the commissioner or director may ask for such information and assurances as the commissioner or director finds reasonable and appropriate.

71.9(2) In the case of a small employer carrier or ODS doing business in only one established geographic service area of the state, if the small employer carrier or ODS elects to nonrenew a health benefit plan insurance coverage under 513B.5, the small employer carrier or ODS shall be prohibited from offering health benefit plans insurance coverages to small employers in any other geographic area of the state without the prior approval of the commissioner or director. In considering whether to grant approval, the commissioner or director may ask for such information and assurances as the commissioner or director finds reasonable and appropriate.

ITEM 19. Rescind rule 191--71.10(513B) and insert the following new rule:

191--71.10(513B) Creditable coverage. For purposes of this chapter, creditable coverage shall have the same definition as 1997 Iowa Acts, House File 701, section 10.

ITEM 20. Amend rule 191--71.11(513B) to read as follows:

191--71.11(513B) Rules related to fair marketing.

71.11(1) a. A small employer carrier or ODS shall actively market at least health insurance coverages including one basic and one standard health benefit plan to small employers in this state. A small employer carrier or ODS may not suspend the marketing or issuance of the basic and standard health benefit plans unless the carrier or ODS has good cause and has received the prior approval of the commissioner or director.

b. In marketing the basic and standard health benefit plans to small employers, a small employer carrier or ODS shall use at least the same sources and methods of distribution that it uses to market other health benefit plans insurance coverages to small employers.

71.11(2) a. A small employer carrier or ODS, in accordance with the provisions of Iowa Code section 513B.10, shall actively offer at least one basic and one standard health benefit plan to any small employer shall accept every small employer that applies for or makes an inquiry regarding health insurance coverage from the small employer carrier or ODS and shall accept every eligible individual who applies for enrollment. The offer shall be in writing and shall include at least the following information:

(1) A general description of the benefits contained in the basic and standard health benefit plans and any other health benefit plan insurance coverage being offered to the small employer, and

(2) Information describing how the small employer may enroll in the plans.

The offer may be provided directly to the small employer or delivered through a producer.

b. (1) A small employer carrier or ODS shall provide a price quote to a small employer (directly or through an authorized producer) within ten working days of receiving a request for a quote and other information as necessary to provide the quote. A small employer carrier or ODS shall notify a small employer (directly or through an authorized producer) of any additional information needed by the small employer carrier or ODS to provide the quote within five working days of receiving a request for a price quote.

(2) A small employer carrier or ODS shall not apply more stringent or detailed requirements related to the application process for the basic and standard health benefit plans than applied for other health benefit plans insurance coverage offered by the carrier or ODS.

c. (1) If a small employer carrier denies coverage under a health benefit plan to a small employer on the basis of a risk characteristic, the denial shall be in writing and state with specificity the reasons for the denial (subject to any restrictions related to confidentiality of medical information). The written denial shall be accompanied by a written explanation of the availability of the basic and standard health benefit plans from the small employer carrier. The explanation shall include at least the following:

1. A general description of the benefits contained in each plan;

2. A price quote for each plan; and

3. Information describing how the small employer may enroll in such plans.

The written information described in this subparagraph may be provided directly to the small employer or delivered through an authorized producer.

(2) The price quote shall be for the lowest priced basic and standard health benefit plan for which the small employer is eligible.

71.11(3) A small employer carrier or ODS shall establish and maintain a toll-free telephone service to provide information to small employers regarding the availability of small employer health benefit plans insurance coverages in this state. The service shall provide information to callers regarding application for coverage from the carrier or ODS. The information may include the names and telephone numbers of producers located in geographic proximity to the caller or such other information reasonably designed to assist the caller to locate an authorized producer or to otherwise apply for coverage.

71.11(4) The small group carrier or ODS shall not require a small employer to join or contribute to any association or group as a condition of being accepted for coverage by the small employer carrier or ODS except, if membership in an association or other group is a requirement for accepting a small employer into a particular health benefit plan insurance coverage, a small employer carrier or ODS may apply such requirement, subject to the requirements of Iowa Code section 513B.10(1)"b" as amended by 1993 Iowa Acts, chapter 80.

71.11(5) A small employer carrier or ODS may not require, as a condition to the offer or sale of a health benefit plan insurance coverage to a small employer, that the small employer purchase or qualify for any other insurance product or service.

71.11(6) a. Carriers offering individual and group health benefit plans insurance coverages in this state shall be responsible for determining whether the plans are subject to the requirements of Iowa Code chapter 513B and this chapter. Carriers or ODSs shall elicit the following information from applicants for such plans at the time of application:

(1) Whether or not any portion of the premium will be paid by or on behalf of a small employer, either directly or through wage adjustments or other means of reimbursement; and

(2) Whether or not the prospective policyholder, certificate holder or any prospective insured individual intends to treat the health benefit plan insurance coverage as part of a plan or program under Section 162 (other than Section 162(1)), Section 125 or Section 106 of the United States Internal Revenue Code.

b. If a small employer carrier or ODS fails to comply with paragraph "a," the small employer carrier or ODS shall be deemed on notice regarding any information that could reasonably have been attained if the small employer carrier had complied with paragraph "a."

71.11(7) a. A small employer carrier or ODS shall annually file the following information with the commissioner related to health benefit plans insurance coverages issued by the small employer carrier or ODS to small employers in this state:

(1) The number of small employers that were issued health benefit plans insurance coverages in the previous calendar year (separated as to newly issued plans and renewals);

(2) The number of small employers that were issued the basic health benefit plan and the standard health benefit plan in the previous calendar year (separated as to newly issued plans and renewals and as to class of business);

(3) The number of small employer health benefit plans insurance coverages in force in each county (or by ZIP code) of the state as of December 31 of the previous calendar year;

(4) The number of small employer health benefit plans insurance coverages that were voluntarily not renewed by small employers in the previous calendar year;

(5) The number of small employer health benefit plans insurance coverages that were terminated or nonrenewed (for reasons other than nonpayment of premium) by the carrier in the previous calendar year; and

(6) The number of small employer health benefit plans insurance coverages that were issued to small employers that were uninsured for at least the three months prior to issue.

b. The information described in paragraph "a" shall be filed no later than March 15 of each year.

71.11(8) and 71.11(9) No change.

ITEM 21. Amend subrules 71.12(1) and 71.12(2) to read as follows:

71.12(1) Subject to 71.12(2), a carrier or ODS shall not offer health benefit plans insurance coverages to small employers or continue to provide coverage under health benefit plans insurance coverages previously issued to small employers in this state unless the carrier or ODS has made a filing with the commissioner or director that the carrier or ODS intends to operate as a small employer carrier or ODS in this state under the terms of this chapter.

71.12(2) a. If a carrier or ODS does not intend to operate as a small employer carrier or ODS in this state, the carrier or ODS may continue to provide coverage under health benefit plans insurance coverages previously issued to small employers in this state only if the carrier or ODS complies with the following provisions:

(1) The carrier or ODS complies with the requirements of Iowa Code chapter 513B (other than sections 513B.11 to 513B.13 as amended by 1993 Iowa Acts, chapter 80) with respect to each of the health benefit plans insurance coverages previously issued to small employers by the carrier or ODS.

(2) The carrier or ODS provides coverage to each new entrant to a health benefit plan insurance coverage previously issued to a small employer by the carrier or ODS. The provisions of Iowa Code chapter 513B (other than sections 513B.11 to 513B.13 as amended by 1993 Iowa Acts, chapter 80) and this chapter shall apply to the coverage issued new entrants.

(3) The carrier or ODS complies with the requirements of 1993 Iowa Acts, chapter 80, section 15 513B.17A, and rule 71.13(513B), as they apply to small employers whose coverage has been terminated by the carrier or ODS, and to individuals and small employers whose coverage has been limited or restricted by the carrier or ODS.

b. A carrier or ODS that continues to provide coverage pursuant to this subrule shall not be eligible to participate in the reinsurance program established under Iowa Code section 513B.11 as amended by 1993 Iowa Acts, chapter 80.

ITEM 22. Amend rule 191--71.13(513B) to read as follows:

191--71.13(513B) Restoration of coverage.

71.13(1) a. Except as provided in 71.13(1)"b," a small employer carrier or ODS shall, as a condition of continuing to transact business in this state with small employers, offer to provide a health benefit plan insurance coverage as described in 71.13(3) to any small employer carrier or ODS after January 1, 1993, unless the carrier's or ODS's termination is pursuant to Iowa Code section 513B.5.

b. The offer required under 71.13(1)"a" shall not be required with respect to a health benefit plan insurance coverage that was not renewed if:

(1) The health benefit plan insurance coverage was not renewed for reasons permitted in Iowa Code section 513B.5(1), or

(2) The nonrenewal was a result of the small employer voluntarily electing coverage under a different health benefit plan insurance coverage.

71.13(2) The offer made under 71.13(1) shall occur not later than 60 days after July 2, 1993. A small employer shall be given at least 60 days to accept an offer made pursuant to 71.13(1).

71.13(3) A health benefit plan insurance coverage provided to a terminated small employer pursuant to 71.13(1) shall meet the following conditions:

a. The health benefit plan insurance coverage shall contain benefits that are identical to the benefits in the health benefit plan insurance coverage that was terminated or nonrenewed.

b. The health benefit plan insurance coverage shall not be subject to any waiting periods (including exclusion periods for preexisting conditions) or other limitations on coverage that exceed those contained in the health benefit plan insurance coverage that was terminated or nonrenewed. In applying such exclusions or limitations, the health benefit plan insurance coverage shall be treated as if it were continuously in force from the date it was originally issued to the date that it is restored pursuant to 71.13(513B) and 1993 Iowa Acts, chapter 80, section 15.

c. The health benefit plan insurance coverage shall not be subject to any provisions that restrict or exclude coverage or benefits for specific diseases, medical conditions or services otherwise covered by the plan.

d. The health benefit plan insurance coverage shall provide coverage to all employees who are eligible employees as of the date the plan is restored. The carrier or ODS shall offer coverage to each dependent of such eligible employees.

e. The premium rate for the health benefit plan insurance coverage shall be no more than the premium rate charged to the small employer on the date the health benefit plan insurance coverage was terminated or nonrenewed provided that, if the number or case characteristics of the eligible employees (or their dependents) of the small employer has changed between the date the health benefit plan insurance coverage was terminated or nonrenewed and the date that it is restored, the carrier or ODS may adjust the premium rates to reflect any changes in case characteristics of the small employer. If the carrier or ODS has increased premium rates for other similar groups with similar coverage to reflect general increases in health care costs and utilization, the premium rate may be further adjusted to reflect the lowest such increase given to a similar group. The premium rate for the health benefit plan insurance coverage may not be increased to reflect any changes in risk characteristics of the small employer group until one year after the date the health benefit plan insurance coverage is restored. Any such increase shall be subject to the provisions of Iowa Code section 513B.4 as amended by 1993 Iowa Acts, chapter 80.

f. The health benefit plan insurance coverage shall not be eligible to be reinsured under the provisions of Iowa Code section 513B.12, except that the carrier or ODS may reinsure new entrants to the health benefit plan insurance coverage who enroll after the restoration of coverage.

ITEM 23. Rescind subrule 71.14(4) and insert in lieu thereof the following new subrule:

71.14(4) A provision shall be made in the basic health benefit plan and the standard health benefit plan covering diagnosis and treatment of human ailments for payment or reimbursement for necessary diagnosis and treatment provided by a chiropractor licensed under Iowa Code chapter 151, if the diagnosis or treatment is provided within the scope of the chiropractor's license.

ITEM 24. Amend 191--Chapter 71 by adding the following new rules 71.15(513B) to 71.18(513B):

191--71.15(513B) Methods of counting creditable coverage.

71.15(1) For purposes of reducing any preexisting condition exclusion period, a group health plan, a carrier, or ODS offering group health insurance coverage shall determine the amount of an individual's creditable coverage by using the standard method described in subrule 71.15(2), except that the plan, carrier, or ODS may use the alternative method under subrule 71.15(3) with respect to any or all of the categories of benefits described under paragraph 71.15(3)"b."

71.15(2) Under the standard method, a group health plan, a health insurance carrier, and an ODS offering group health insurance coverage shall determine the amount of creditable coverage without regard to the specific benefits included in the coverage.

a. For purposes of reducing the preexisting condition exclusion period, a group health plan, a health insurance carrier, or ODS offering group health insurance coverage shall determine the amount of creditable coverage by counting all the days that the individual has under one or more types of creditable coverage. If on a particular day, an individual has creditable coverage from more than one source, all the creditable coverage on that day is counted as one day. Further, any days in a waiting period for a plan or policy are not creditable coverage under the plan or policy.

b. Days of creditable coverage that occur before a significant break in coverage are not required to be counted.

c. Notwithstanding any other provision of paragraph 71.15(2)"b," for purposes of reducing a preexisting condition exclusion period, a group health plan, a health insurance carrier, and an ODS offering group health insurance coverage may determine the amount of creditable coverage in any other manner that is at least as favorable to the individual as the method set forth in paragraph 71.15(2)"b."

71.15(3) Under the alternative method, a group health plan, a health insurance carrier, or an ODS offering group health insurance coverage shall determine the amount of creditable coverage based on coverage within any category of benefits described in subparagraph 71.15(3)"b"(2) and not based on coverage. The plan may apply a different preexisting condition exclusion period with respect to each category and may apply a different preexisting condition exclusion period for benefits that are not within any category. The creditable coverage determined for a category of benefits applies only for purposes of reducing the preexisting condition exclusion period with respect to that category. An individual's creditable coverage for benefits that are not within any category for which the alternative method is being used is determined under the standard method of paragraph 71.15(3)"a."

a. A plan, carrier, or ODS using the alternative method is required to apply it uniformly to all participants and beneficiaries in the plan or policy. The use of the alternative method must be set forth in the plan.

b. The alternative method for counting creditable coverage may be used for coverage for any of the following categories of benefits:

(1) Mental health.

(2) Substance abuse treatment.

(3) Prescription drugs.

(4) Dental care.

(5) Vision care.

c. If the alternative method is used, the plan is required to:

(1) State prominently that the plan is using the alternative method of counting creditable coverage in disclosure statements concerning the plan, and state this to each enrollee at the time of enrollment under the plan;

(2) Include in these statements a description of the effect of using the alternative method, including an identification of the category's uses; and

(3) Under the alternative method, the group health plan, carrier, or ODS counts creditable coverage within a category if any level of benefits is provided within the category.

191--71.16(513B) Certificates of creditable coverage.

71.16(1) Group health plans, carriers, and ODSs shall issue certificates of creditable coverage to persons losing coverage. A group health plan, carrier, or ODS required to provide a certificate under this rule for an individual is deemed to have satisfied the certification requirements for that individual if another party provides the certificate, but only to the extent that information relating to the individual's creditable coverage and waiting or affiliation period is provided by the other party. Certificates shall be issued within a reasonable amount of time following termination to employees and dependents:

a. Automatically upon the termination of an individual's group coverage;

b. Automatically upon the termination of COBRA coverage or ODS;

c. Upon request within 24 months after coverage ends.

71.16(2) Certificates in writing. Certificates of coverage must be in writing unless all of the following conditions are met:

a. The individual requesting the certificate is not entitled to receive a certificate;

b. The individual requests that the certificate be sent to another plan or carrier or ODS;

c. The plan, carrier, or ODS receiving the certificate agrees to accept the information through means other than a written certificate;

d. The plan, carrier, or ODS receiving the certificate receives the certificate within a reasonable amount of time.

71.16(3) Required information. The certificate shall include the following information:

a. The date the certificate is issued;

b. The name of the group plan providing coverage;

c. The name of the employee or dependent to whom the certificate applies, other relevant identifying information, and the name of the employee if the certificate is for a dependent;

d. The plan administrator's name, address and telephone number;

e. A telephone number to call for further information if different from above;

f. Either a statement that the person has at least 18 months' creditable coverage without a significant break of coverage or the date any waiting period and creditable coverage began;

g. The date creditable coverage ended or an indication that the coverage is in force.

71.16(4) Family information. Information for families may be combined on one certificate. Any differences in creditable coverages shall be clearly delineated.

71.16(5) Dependent coverage transition rule. A group health plan or carrier or ODS that does not maintain dependent data is deemed to have satisfied the requirement to issue dependent certificates by naming the employee and specifying that the coverage on the certificate is for dependent coverage.

71.16(6) Delivering certificates. The certificate shall be given to the individual, plan or carrier or ODS requesting the certificate. The certificates may be sent by first-class mail. When a dependent's last-known address differs from the employee's last-known address, a separate certificate shall be provided to the dependent at the dependent's last-known address. Separate certificates may be mailed together to the same location.

71.16(7) A group health plan, carrier, or ODS shall establish a procedure for individuals to request and receive certificates.

71.16(8) A certificate is not required to be furnished until the group health plan, carrier, or ODS knows or should have known that dependent's coverage terminated.

71.16(9) Demonstrating creditable coverage. An individual has the right to demonstrate creditable coverage, waiting periods, and affiliation periods when the accuracy of the certificate is contested or a certificate is unavailable. A group health plan, carrier, or ODS shall consider information obtained by it or presented on behalf of an individual to determine whether the individual has creditable coverage.

191--71.17(513B) Notification requirements.

71.17(1) A group health plan, carrier, or ODS shall provide written notice to the employee and dependents of:

a. The existence of any preexisting condition exclusions.

b. The length of time to which the exclusions will apply.

c. The right of the employee or dependent to appeal a decision to impose a preexisting condition exclusion.

d. The right of the person to demonstrate creditable coverage including:

(1) The right of the person to request a certificate from a prior group health plan, carrier, or ODS;

(2) A statement that the current group health plan, carrier, or ODS will assist in obtaining the certificate;

(3) That the group health plan, carrier, or ODS will use the alternative method of counting creditable coverage; and

(4) Special enrollment rights when an employee declines coverage for the employee or dependents.

71.17(2) A group health plan, carrier, or ODS shall provide written notice to the employee and dependents of the modification of a prior creditable coverage decision when the group health plan, carrier, or ODS subsequently determines either no or less creditable coverage existed provided that the group health plan, carrier, or ODS acts according to its initial determination until the final determination is made.

191--71.18(513B) Special enrollments.

71.18(1) A carrier or organized delivery system shall permit individuals to enroll for coverage under terms of a health benefit plan, without regard to other enrollment dates permitted under the group health plan, if an eligible employee requests enrollment or, if the group health plan makes coverage available to dependents, on behalf of dependent who is eligible but not enrolled under the group health plan, during the special enrollment period, which shall be 30 days following an event described in subrules 71.18(2) and 71.18(3) with respect to the individual for whom enrollment is requested. A carrier or organized delivery system may impose enrollment requirements that are otherwise applicable under terms of the group health plan to individuals requesting immediate enrollment.

71.18(2) An individual, who previously had other coverage for medical care and for whom an eligible employee declined coverage under the group health plan, may be enrolled during a special enrollment period if the individual has lost the other coverage for medical care and:

a. If required by the group health plan, the eligible employee stated in writing when declining the coverage, after being given a notice of the requirement form, and the consequences of failure to submit a written statement that coverage was declined because the individual had coverage for medical care under another group health plan or otherwise; and

b. When enrollment was declined for the individual:

(1) The individual had coverage other than under aCOBRA continuation provision and the coverage has been exhausted; or

(2) The individual had coverage other than under aCOBRA continuation provision and the coverage has been terminated due to loss of eligibility for the coverage, including loss of coverage as a result of legal separation, divorce, death, termination of employment, reduction in the number of hours of employment and any loss of eligibility after a period that is measured by reference to any of the foregoing, or termination of employer contributions toward the other coverage.

c. For purposes of this subparagraph 71.18(2)"b"(2):

(1) Loss of eligibility for the coverages does not include loss of eligibility due to the eligible employee's or dependent's failure to make timely premium payments or termination of coverage for cause such as making a fraudulent claim or intentional misrepresentation of material fact in connection with the group health plan; and

(2) Employer contributions include contributions by any current or former employer of the individual or another person that was contributing to coverage for the individual.

(3) Exhaustion of COBRA continuation coverage means that an individual's COBRA continuation coverage ceases for any reason other than either failure of the individual to pay premiums on a timely basis, or for cause, such as making a fraudulent claim or an intentional misrepresentation of a material fact in connection with the plan. An individual is considered to have exhausted COBRA continuation coverage if the coverage ceases.

71.18(3) If the eligible employee has previously declined enrollment under the group health plan but acquires a dependent through marriage, birth, adoption or placement for adoption, the eligible employee or dependent may be enrolled during the special enrollment period with respect to the individual.

71.18(4) Enrollment of the eligible employee or dependent is effective not later than the first day of the calendar month or, for a newborn or adopted child, on the date of birth, adoption, or placement for adoption.

ITEM 25. Rescind subrule 75.10(3) and insert in lieu thereof the following new subrule:

75.10(3) A provision shall be made in the basic health benefit plan and the standard health benefit plan covering diagnosis and treatment of human ailments for payment or reimbursement for necessary diagnosis and treatment provided by a chiropractor licensed under Iowa Code chapter 151, if the diagnosis or treatment is provided within the scope of the chiropractor's license.

ITEM 26. Amend 191--Chapter 75, matrix footnote 1, to read as follows:

⁽¹⁾ $10,000 $50,000 Lifetime Max.

ITEM 27. Amend 191--Chapter 75 by adding the following new rule:

191--75.11(513C) Maternity benefit rider. Every individual insurance carrier and ODS shall offer an optional maternity benefit rider for the basic and standard health benefit plans providing benefits, as any other illness, for a pregnancy and delivery without complications with a 12-month waiting period. Credit toward meeting the waiting period shall be given for prior coverage of a pregnancy without complications provided there was no more than a 63-day break in coverage. A maternity rider offered under this rule shall only be offered when the basic or standard plan is initially purchased. Premiums for the rider shall be calculated based upon generally accepted actuarial principles and shall not be subject to the premium restrictions in Iowa Code subsection 513C.10(6). The earned premiums and paid losses associated with the rider shall not be considered by the Iowa Individual Health Benefit Reinsurance Association for purposes of Iowa Code section 513C.10.

ARC 7639A

Notice of Intended Action was published in IAB, Volume XX, Number 6, on September 10, 1997, page 572, as ARC 7492A.

Item 1 amends numbered paragraph "4" of rule 701-- 10.6(421) to add language that the 75 percent penalty applies when the failure to file a return is with the intent to evade tax or willfully filing a false return or deposit form.

Item 2 amends 701--Chapter 42 by adding new rule 701--42.12(422) to implement 1997 Iowa Acts, Senate File 553, which allows an income tax credit to a shareholder in an S corporation bank for the shareholder's pro-rata share of the franchise tax paid by the bank.

Item 3 amends rule 701--50.1(422) to incorporate changes required by 1997 Iowa Acts, House File 306, in the apportionment of income by resident shareholders of S corporations. These changes are: (1) For tax years beginning on or after January 1, 1997, resident shareholders will no longer have to pay tax and then request a refund of the tax related to income earned outside Iowa, and (2) For tax years beginning on or after January 1, 1998, all shareholders in an S corporation which carries on business within and without Iowa may elect to apportion income. Item 3 also amends rule 701--50.1(422) to incorporate changes made to apportionment of income made by 1997 Iowa Acts, House File 266. This change prohibits a shareholder in an S corporation which carries on business within and without Iowa which has elected to apportion income and then elects not to apportion income, to reelect to apportion income for three tax years immediately following the first tax year in which the shareholder elected not to apportion income.

Item 4 amends the last paragraph of rule 701--50.2(422) by striking the word "any."

Item 5 amends rule 701--50.5(422) to correct several errors in the computation of the amount of federal income tax related to S corporation income.

Item 6 amends rule 701--50.8(422) to set forth that it is only necessary to file a return and pay the tax and then request a refund for the tax year beginning on or after January 1, 1996, and before January 1, 1998.

Item 7 amends 701--Chapter 50 by rescinding rule 701--50.9(422) and inserting new rule 701--50.9(422). This rule change was necessary to correct several errors in the examples that became known after taxpayers began to prepare their tax returns.

Item 8 amends subrule 51.1(2) to include in the definition of a corporation "partnerships taxed as corporations under the Internal Revenue Code."

Item 9 amends the implementation clause of rule 701--51.1(422).

Items 10 and 11 amend subrule 52.1(2) by adding a new paragraph "c" and amend the implementation clause of rule 701--52.1(422) to implement the provisions of 1997 Iowa Acts, House File 354.

Item 12 amends the second paragraph of subrule 52.5(2) to include dividends from a foreign sales corporation in the deduction from adjusted current earnings which cannot be constitutionally included for state income tax purposes.

Items 13 and 14 amend the first paragraph of rule 701--52.7(422) and the implementation clause to incorporate provisions of 1997 Iowa Acts, Senate File 129.

Item 15 amends 701--Chapter 52 to adopt new rule 701--52.14(422) to set forth the tax credits available to an eligible business in an enterprise zone as created by 1997 Iowa Acts, House File 724.

Item 16 amends rule 701--53.10(422) and the implementation clause to incorporate provisions of 1997 Iowa Acts, Senate File 129.

Item 17 amends the first paragraph of rule 701-- 53.12(422) to include reference to the date January 1, 1996, which is the date the federal environmental tax expired.

Item 18 amends subrule 54.7(3) to allow gas pipeline companies to use dekatherms rather than cubic feet to apportion income. This change is being made because the federal Energy Regulatory Commission is requiring this change on reports that must be filed with the Commission.

Item 19 amends the first paragraph of rule 701-- 59.1(422) to include a reference to new rule 701-- 59.21(422).

Item 20 amends rule 701--59.9(422) and the implementation clause to incorporate provisions of 1997 Iowa Acts, Senate File 129.

Item 21 amends 701--Chapter 59 by adding new rule 701--59.21(422) which sets forth that for tax years beginning on or after January 1, 1997, an S corporation financial institution must compute an amount of income as though it were subject to federal corporation income tax.

These amendments are identical to those published under Notice of Intended Action.

These amendments will become effective December 10, 1997, after filing with the Administrative Rules Coordinator and publication in the Iowa Administrative Bulletin.

These amendments are intended to implement Iowa Code chapters 421 and 422.

EDITOR'S NOTE: Pursuant to recommendation of the Administrative Rules Review Committee published in the Iowa Administrative Bulletin, September 10, 1986, the text of these rules [amendments to Chs 10, 42, 50 to 54, 59] is being omitted. These rules are identical to those published under Notice as ARC 7492A, IAB 9/10/97.

ARC 7638A

Notice of Intended Action was published in IAB, Volume XX, Number 6, on September 10, 1997, page 577, as ARC 7494A.

1997 Iowa Acts, Senate File 30 and House File 266, enacted a number of changes in the sales and use tax laws. Among those changes are the following: Sales of prepaid telephone calling cards are now taxable sales of tangible personal property; aquaculture is defined to be exempt agricultural production; and sales of "adjuvants" and "surfactants" which enhance the effect of certain agricultural chemicals are now exempt from tax. The exemption applicable to property purchased for long-term lease is extended from property purchased for a lease of more than one year to property purchased for lease of more than five months. Finally, for use tax purposes, any retailer operating in Iowa through a "representative" (rather than the old term "agent") is a "retailer maintaining a place of business in this state." Various rules are amended to reflect these changes in the Iowa Code.

These amendments are identical to those published under Notice of Intended Action.

These amendments will become effective December 10, 1997, after filing with the Administrative Rules Coordinator and publication in the Iowa Administrative Bulletin.

These amendments are intended to implement 1997 Iowa Acts, Senate File 30 and House File 266.

EDITOR'S NOTE: Pursuant to recommendation of the Administrative Rules Review Committee published in the Iowa Administrative Bulletin, September 10, 1986, the text of these rules [amendments to Chs 16 to 18, 30] is being omitted. These rules are identical to those published under Notice as ARC 7494A, 9/10/97.

ARC 7637A

Notice of Intended Action was published in IAB, Volume XX, Number 6, on September 10, 1997, page 581, as ARC 7493A.

These amendments implement 1997 Iowa Acts, House Files 4, 266, 495, 645, 724, and 726.

Items 1 and 2 permit a city with a population of more than 125,000 the option of having a city board of review or a ten- member county board of review. If the county board of review is selected, an additional four members may be appointed if the number of protests warrants an expansion of the board.

Items 3 through 5 clarify that the taxes for buildings and improvements located on leased land are the responsibility of the owner of the buildings and improvements.

Item 6 requires that property tax payments must be received by the county treasurer on or before the last business day preceding October 1 or April 1 to avoid delinquency. If mailed, the payment envelope must bear a postmark date preceding October 1 or April 1.

Item 7 authorizes the director of revenue and finance to revoke property tax exemptions if erroneously allowed.

Items 8 and 9 eliminate the allowance of late filings for the homestead property tax credit.

Items 10 through 12 eliminate the allowance of late filings for the military service property tax exemption and permit the allowance of the exemption on property owned by a family farm corporation.

Items 13 through 15 provide that computers and industrial machinery and equipment acquired prior to 1982 qualify for the tax phaseout and replacement and change the date for the county auditor to submit tax replacement claims to theDepartment of Revenue and Finance from July 1 to September 1.

Items 16 through 18 permit assessors and deputy assessors to carry forward to another assessment jurisdiction any excess continuing education credit hours accumulated in the position being vacated and require a deputy to complete the required hours of credit to be reappointed.

These amendments are identical to those published under Notice of Intended Action.

These amendments will become effective December 10, 1997, after filing with the Administrative Rules Coordinator and publication in the Iowa Administrative Bulletin.

These amendments are intended to implement Iowa Code chapters 425, 426A, 427, 427B, 428, 441, and 445.

EDITOR'S NOTE: Pursuant to recommendation of the Administrative Rules Review Committee published in the Iowa Administrative Bulletin, September 10, 1986, the text of these rules [71.20, 71.21, 75.3, 78.3, 80.1, 80.2, 80.7, 123.3, 123.4] is being omitted. These rules are identical to those published under Notice as ARC 7493A, IAB 9/10/97.

ARC 7643A

The amendments discontinue the Board's annual reporting of management efficiency data.

The adopted amendments eliminate unnecessary or duplicative filings. In the past, the Board has on several occasions made management efficiency adjustments in rate case proceedings pursuant to the authority of Iowa Code section 476.52. The adjustments have been based, in large part, on the unique circumstances presented in the particular cases and not on information contained in the management efficiency annual reports. The Board recognizes that the information contained in the annual reports may not always accurately reflect management efficiency or inefficiency. Therefore, the Board is eliminating rule 29.5(476), which requires the annual reports. However, the Board is amending subrule 29.3(1) so the Board retains the option, at its discretion, of obtaining and reporting management efficiency data in the event it is required in a particular case.

On August 18, 1997, the Board issued an order in this docket to consider the adoption of amendments to 199 IAC 29.3(1) and 29.5(476). The proposed amendments were published in the IAB Vol. XX, No. 6 (9/10/97) p. 589, as ARC 7486A. Written comments on the proposed amendments were filed by the Consumer Advocate Division of the Department of Justice (Consumer Advocate), Peoples Natural Gas Company, Division of UtiliCorp United Inc., GTE Midwest Incorporated, MidAmerican Energy Company, and IES Utilities Inc. An oral presentation was held October 8, 1997.

In the initial written comments, all commenters except Consumer Advocate supported the proposed amendments. Subsequent to the oral presentation, Consumer Advocate filed supplemental comments on October 10, 1997, and said it no longer objected to the proposed amendments. Consumer Advocate concluded that information required to be filed in other regulatory filings provided sufficient information, in conjunction with discovery procedures, for an evaluation of management efficiency.

The Board intends to continue closely scrutinizing management efficiency. The adopted amendments are simply a recognition that the management efficiency reports are not, in many cases, a useful tool to determine management efficiency or inefficiency. Also, much of the information contained in these reports is duplicated in other regulatory filings. The Board's limited resources can be better applied in other areas and in focusing on a particular utility's unique attributes which, judging from prior cases, are a better determinant of management efficiency.

The adopted amendments to 199 IAC 29.3(1) and 29.5(476) are identical those published under Notice of Intended Action. Therefore, additional public comment on the adopted amendments is not necessary.

These amendments are intended to implement Iowa Code sections 476.2 and 476.52.

These amendments will become effective on December 10, 1997.

The following amendments are adopted.

ITEM 1. Amend subrule 29.3(1) as follows:

29.3(1) In general. The efficiency or inefficiency of a utility will be evaluated on a case-by-case basis, based upon the utility's particular facts and circumstances. Utility management efficiency does not lend itself to an absolute measure due to the vast array of extremely important factors that may vary from area to area. These include such things as customer mix, territory of the utility, economic conditions in the areas served, weather patterns and disasters. The reality of change, and the ability of management to anticipate and respond to these changes, greatly affect any judgment of management efficiency or inefficiency, and must be considered in establishing any rewards for efficiency or penalties for inefficiency.

When evaluating a utility, the board may consider any of the factors listed in this subrule and any additional relevant information. These factors will be guidelines for evaluating a utility's efficiency or inefficiency. No single factor or group of factors will be deemed conclusive evidence of efficiency or inefficiency. In considering those factors, the board may use collect data collected under rule 29.5(476) to compare a utility, except a water utility, to other utilities providing the same service in the state. The board may consider:

a. The price per unit of service (including amounts collected subject to refund) by customer class and type of service. For natural gas utilities, one "unit of service" is 1000 BTUs.

b. Operation and maintenance costs per unit of service. Low operations and maintenance costs will not be deemed indicative of efficiency if quality of service is substandard. This data, when required, shall be reported on a total company basis and on an Iowa jurisdictional basis if the company serves jurisdictions other than Iowa.

c. Quality of service, as reflected by customer complaints shown in company and board records and measures of customer satisfaction.

d. Officer compensation.

(1) Gas and electric utilities. The total compensation for electric and gas utilities for each officer. The utility, when required, shall provide this information both for the utility and for the parent/holding company.

(2) Telephone utilities:

1. The five largest total compensation packages that are expensed or capitalized to Iowa's regulated operations by the utility or its affiliates, and

2. The five largest total compensation packages for officers or employees stationed in Iowa.

Each telephone company, when required, shall provide this information and shall indicate what portions of the compensation packages in 29.3(1)"d"(2)"2" are allocated to Iowa-regulated operations.

e. The company's bad debt ratio.

f. Innovative ideas implemented by utility management.

g. Other factors the board determines to be relevant in an individual proceeding.

ITEM 2. Rescind rule 199--29.5(476) as follows:

199--29.5(476) Annual reports of management efficiency. The board will annually publish data reflecting the different measures of utilities' operations listed in rule 29.3(476). These data will not be used to rank the utilities. Since management efficiency can only be evaluated by the consideration of a wide variety of factors which may be unrelated, any ranking of utilities would be meaningless and misleading. The data will be collected from annual reports filed under 199--Chapter 23 and from other reports which the board may require. The data, when admitted as evidence of record, may be used in the context of a rate case, together with rate-case-specific information, to evaluate management efficiency. Two copies of the report will be distributed to the president of each company evaluated and one copy will be filed in the records center.

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