AUSTIN – A state commission, citing the fact that four out of five insured Texans now receive health care through preferred provider organizations, urged the Legislature on Wednesday to protect consumers by placing all PPOs under state regulation for the first time.

The staff of the Texas Sunset Advisory Commission said the lack of state authority over PPOs is "outdated" in the current health care environment and may result in harm to a large number of consumers if the situation remains unchanged.

A report from the commission on the Texas Department of Insurance called for the state agency to begin licensing of all PPOs in the state similar to the way HMOs are now regulated. The commission periodically evaluates all state agencies for effectiveness and recommends changes to the Legislature.

In addition, the Sunset Commission staff recommended that the Office of Public Insurance Counsel – a state agency that represents insurance consumers – be abolished and its employees and duties into the shifted into the insurance department.

It also called for changes in state regulation of auto and home insurance rates that Sunset Commission staffers said would improve the current system for setting rates. Under the current system, called "file-and-use," insurers can put rate hikes into effect immediately after notifying the state Insurance Department.

The insurance commissioner has authority deem rate increases as excessive and to deny them, but in recent years that authority mainly has been used against the largest companies in the state.