Senate Bill No. 475
(By Senators Tomblin, Mr. President, and Boley,
By Request of the Executive)
____________
[Introduced; referred to the Committee
on Banking and Insurance; and then to the Committee on
Finance.]
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A BILL to amend and reenact sections two, three, four, seven,
eight, nine, twelve, fourteen, fifteen, sixteen, seventeen,
eighteen, nineteen, twenty-four, twenty-five and twenty-six,
article twenty-five-a, chapter thirty-three of the code of
West Virginia, one thousand nine hundred thirty-one, as
amended; and to further amend said article by adding thereto
two new sections, designated sections three-a and seven-a,
all relating to insurance; health maintenance organization
act; definitions; conditions precedent to issuance of
certificate of authority; application for certificate of
authority; issuance of certificate of authority; fiduciary
duties of officers; approval of contracts by commissioner;
provider contracts; evidence of coverage; charges for health
care services; cancellation of contract by enrollee; annual
report; complaint system; prohibited practices; regulation
of marketing; powers of insurers and hospital and medical
service corporations; examinations; suspension or revocation of certificate of authority; rehabilitation, liquidation or
conservation of health maintenance organization; statutory
construction and relationship to other laws; filings and
reports as public documents; and confidentiality of medical
information.
Be it enacted by the Legislature of West Virginia:
That sections two, three, four, seven, eight, nine, twelve,
fourteen, fifteen, sixteen, seventeen, eighteen, nineteen,
twenty-four, twenty-five and twenty-six, article twenty-five-a,
chapter thirty-three of the code of West Virginia, one thousand
nine hundred and thirty-one, as amended, be amended and
reenacted; and that said article be further amended by adding
thereto two new sections, designated sections three-a and
seven-a, all to read as follows:
ARTICLE 25A. HEALTH MAINTENANCE ORGANIZATION ACT.
§33-25A-2.Definitions.
(1) "Basic health care services" means physician, hospital,
out-of-area, podiatric, laboratory, X ray, emergency, short-term
mental health services not exceeding twenty outpatient visits in
any twelve-month period, and cost-effective preventive services
including immunizations, well-child care, periodic health
evaluations for adults, voluntary family planning services,
infertility services and children's eye and ear examinations
conducted to determine the need for vision and hearing
corrections.
(2) "Capitation" means the fixed amount paid by a health maintenance organization to a health care provider under contract
with the health maintenance organization in exchange for the
rendering of health care services.
(3) (2) "Commissioner" means the commissioner of insurance.
(4) (3) "Consumer" means any person who is not a provider of
care or an employee, officer, director or stockholder of any
provider of care.
(5) (4) "Copayment" means a specific dollar amount, except
as otherwise provided for by statute, that the subscriber must
pay upon receipt of covered health care services. nominal payment
required of enrollees as a condition of the receipt of specific
health services. Copayments must be reasonable to ensure a
subscriber access to health care services and may not be
established in an amount that will prevent a person from
receiving a covered health care service or benefit as specified
in the subscriber contract approved by the commissioner.
(6) (5) "Employee" means a person in some official
employment or position working for a salary or wage continuously
for no less than one calendar quarter and who is in such a
relation to another person that the latter may control the work
of the former and direct the manner in which the work shall be
done.
(7) (6) "Employer" means any individual, corporation,
partnership, other private association, or state or local
government that employs the equivalent of at least twenty-five
two full-time employees during any four consecutive calendar quarters.
(8) (7) "Enrollee", "subscriber," "member" means an
individual who has been voluntarily enrolled in a health
maintenance organization, including individuals on whose behalf
a contractual arrangement has been entered into with a health
maintenance organization to receive health care services.
(9) (8) "Evidence of coverage" means any certificate,
agreement or contract issued to an enrollee setting out the
coverage and other rights to which the enrollee is entitled.
(10) (9) "Health care services" means any services or goods
included in the furnishing to any individual of medical, mental
or dental care, or hospitalization or incident to the furnishing
of such care of hospitalization, osteopathic services, home
health, health education, rehabilitation, as well as the
furnishing to any person of any and all other services or goods
for the purpose of preventing, alleviating, curing or healing
human illness or injury.
(11) (10) "Health maintenance organization or HMO" means a
public or private organization which provides, or otherwise makes
available to enrollees, health care services, including at a
minimum basic health care services:
(a) Is compensated except for copayments for the provision
of basic health care services to enrollees solely on a prepaid
per capita or prepaid aggregate fixed sum predetermined periodic
rate basis;
(b) Provides physicians' services primarily (i) directly through physicians who are either employees or partners of such
organization, or (ii) through arrangements with individual
physicians or one or more groups of physicians organized on a
group practice or individual practice basis, or (iii) through
some combination of (i) and (ii) above;
(c) Assures the availability, accessibility and quality
including effective utilization of the health care services which
it provides or makes available through clearly identifiable focal
points of legal and administrative responsibility.
(d) Offers services through a managed care system, in which
a primary physician is designated for each subscriber upon
enrollment. The primary care physician is responsible for
coordinating the health care of the subscriber and is responsible
for referring the subscriber to other providers when necessary.
(12) "Impaired" means a financial situation in which, based
upon the financial information which would be required by this
chapter for the preparation of the health maintenance
organization's annual statement, the assets of the health
maintenance organization are less than the sum of all of its
liabilities and required reserves including any minimum capital
and surplus required of the health maintenance organization by
this chapter so as to maintain its authority to transact the
kinds of business or insurance it is so authorized to transact.
(13) (11) "Individual practice arrangement basis" means any
agreement or arrangement to provide medical services on behalf of
a health maintenance organization among or between physicians or between a health maintenance organization and individual
physicians or groups of physicians, where the physicians are not
employees or partners of such health maintenance organization and
are not members of or affiliated with a medical group.
(14) "Insolvent" or "insolvency" means a financial situation
in which, based upon the financial information which would be
required by this chapter for the preparation of the health
maintenance organization's annual statement, the assets of the
health maintenance organization are less than the sum of all of
its liabilities and required reserves.
(15) (12) "Medical group" or "group practice" means: (a) A
professional corporation, partnership, association, or other
organization which is composed solely of health professionals
licensed to practice medicine or osteopathy and of such other
licensed health professionals, including podiatrists, dentists
and optometrists, as are necessary for the provision of health
services for which the group is responsible; (b) a majority of
the members of which are licensed to practice medicine or
osteopathy; (c) as their principal professional activity engage
in the coordinated practice of their profession; (d) pool their
income for practice as members of the group and distribute it
among themselves according to a prearranged salary, drawing
account or other plan; and (e) share medical and other records
and substantial portions of major equipment and professional,
technical and administrative staff.
(16) (13) "Premium" means a predetermined periodic rate prepaid per capita or prepaid aggregate fixed sum unrelated to
the actual or potential utilization of services of any particular
person which is charged by the health maintenance organization
for health services provided to an enrollee.
(17) (14) "Provider" means any physician, hospital or other
person or organization which is licensed or otherwise authorized
in this state to furnish health care services.
(18) "Uncovered Expenses" means the cost of health care
services that are covered by a health maintenance organization,
for which a subscriber would also be liable in the event of the
insolvency of the organization.
(19) (15) "Service area" means the county or counties
approved by the commissioner within which the health maintenance
organization may provide or arrange for health care services to
be available to its subscribers area identified by a health
maintenance organization as the area within which health care
services will be provided by the health maintenance organization.
(20) (16) "Statutory surplus" means the minimum amount of
unencumbered surplus which a an association or corporation must
maintain pursuant to the requirements of this article.
(21) (17) "Surplus" means the amount by which a an
association's or corporation's assets exceeds its liabilities and
required reserves based upon the financial information which
would be required by this chapter for the preparation of the
association's or corporation's annual statement except that
assets pledged to secure debts not reflected on the books of the health maintenance organization shall not be included in surplus.
(22) "Surplus notes" means debt which has been subordinated
to all claims of subscribers and general creditors of the
organization.
(23) "Qualified independent actuary" means an actuary who is
a member of the American Academy of Actuaries or the Society of
Actuaries and has experience in establishing rates for health
maintenance organizations and who has no financial or employment
interest in the health maintenance organization.
§33-25A-3a. Conditions precedent to issuance or maintenance of
a certificate of authority; effect of bankruptcy
proceedings.
(1) As a condition precedent to the issuance or maintenance
of a certificate of authority, a health maintenance organization
must file or have on file with the commissioner:
(a) An acknowledgment that a delinquency proceeding pursuant
to article ten of this chapter or supervision by the commissioner
pursuant to article thirty-four of this chapter constitutes the
sole and exclusive method for the liquidation, rehabilitation,
reorganization, or conservation of a health maintenance
organization.
(b) A waiver of any right to file or be subject to a
bankruptcy proceeding.
(2) The commencement of a bankruptcy proceeding either by or
against a health maintenance organization shall, by operation of
law:
(a) Terminate the health maintenance organization's
certificate of authority.
(b) Vest in the commissioner for the use and benefit of the
subscribers of the health maintenance organization the title to
any deposits of the HMO held by the commissioner.
If the proceeding is initiated by a party other than the health
maintenance organization, the operation of subsection (2) shall
be stayed for a period of sixty days following the date of
commencement of the proceeding.
§33-25A-3b. Application for certificate of authority.
(1) Notwithstanding any law of this state to the contrary,
any person may apply to the commissioner for and obtain a
certificate of authority to establish or operate a health
maintenance organization in compliance with this article. No
person shall sell health maintenance organization enrollee
contracts, nor shall any health maintenance organization commence
services, prior to receipt of a certificate of authority. Any
person may, however, establish the feasibility of a health
maintenance organization prior to receipt of a certificate of
authority through funding drives and by receiving loans, and
grants. and preliminary payments. The commissioner shall
promulgate regulations in accordance herewith establishing
methods of determining the feasibility of operating prospective
health maintenance organizations.
(2) Every health maintenance organization in operation as of
the effective date of this article shall submit an application for a certificate of authority under this section within thirty
days of the effective date of this article. Each such applicant
may continue to operate until the commissioner acts upon the
application. In the event that an application is denied pursuant
to section four of this article, the applicant shall henceforth
be treated as a health maintenance organization whose certificate
of authority has been revoked.
(3) The commissioner may require any organization providing,
or arranging, or assuming risk for health care services on a
prepaid per capita or prepaid aggregate fixed sum basis
predetermined periodic rate to apply for a certificate of
authority under this article. Any organization directed to apply
for a certificate of authority shall be subject to the provisions
of subsection (2) of this section.
(4) Each application for a certificate of authority shall be
verified by an officer or authorized representative of the
applicant, shall be in a form prescribed by the commissioner, and
shall set forth or be accompanied by any and all information
required by the commissioner, including:
(a) The basic organizational document;
(b) The bylaws or rules and regulations;
(c) A list of the names, addresses and official positions of
each member of the governing body, which shall contain a full
disclosure in the application of any financial interest by such
officer or member of the governing body or any provider or any
organization or corporation owned or controlled by such person and the health maintenance organization and the extent and nature
of any contract or financial arrangements between such persons
and the health maintenance organization;
(d) Description of the health maintenance organization;
(e) A copy of each evidence of coverage form and of each
enrollee contract form;
(f) Financial statements which include the assets,
liabilities and sources of financial support of the applicant and
any corporation or organization owned or controlled by the
applicant;
(g) (i) A description of the proposed method of marketing
the plan: (ii) A schedule of proposed charges; and (iii) a
financial plan which includes a three-year projection of the
expenses and income and other sources of future capital;
(h) A power of attorney duly executed by such applicant, if
not domiciled in this state, appointing the commissioner and his
successors in office, and duly authorized deputies, as the true
and lawful attorney of such applicant in and for this state upon
whom all lawful process in any legal action or proceeding against
the health maintenance organization on a cause of action arising
in this state may be served;
(i) A statement reasonably describing the geographic service
area or areas to be served and the type or types of enrollees to
be served;
(j) A description of the complaint procedures to be utilized
as required under section twelve of this article;
(k) A description of the mechanism by which enrollees will
be afforded an opportunity to participate in matters of policy
and operation under section six of this article; and
(l) A complete biographical statement on forms prescribed by
the commissioner and an independent investigation report on all
of the individuals referred to in subdivision (c) of this section
and all officers, directors and persons holding five percent (5%)
or more of the common stock of the organization;
(m) A comprehensive feasibility study, performed by a
qualified actuary in conjunction with a certified public
accountant which shall contain a certification by the qualified
actuary and an opinion by the certified public accountant as to
the feasibility of the proposed organization. The study shall be
for the greater of three years or until the health maintenance
organization has been projected to be profitable for twelve
consecutive months. The study must show that the health
maintenance organization would not, at the end of any month of
the projection period, have less than the minimum capital and
surplus as required by subparagraph (ii), subdivision (c),
subsection (2), section four of this article. The qualified
actuary shall certify that: The rates are neither inadequate nor
excessive nor unfairly discriminatory; the rates are appropriate
for the classes of risks for which they have been computed; the
rating methodology is appropriate, such certification shall
include an adequate description of the rating methodology showing
that such methodology follows consistent and equitable actuarial principles; the health maintenance organization is actuarially
sound, which certification shall consider the rates, benefits,
and expenses of, and any other funds available for the payment of
obligations of, the organization; the rates being charged or to
be charged are actuarially adequate to the end of the period for
which rates have been guaranteed; and incurred but not reported
claims and claims reported but not fully paid have been
adequately provided for;
(l) (n) Such other information as the commissioner may
require to be provided.
(5) A health maintenance organization shall, unless
otherwise provided for by regulations promulgated by the
commissioner, file notice prior to any modification of the
operations or documents filed pursuant to this section or as the
commissioner may require by regulation. If the commissioner does
not disapprove of the filing within ninety thirty days of filing,
it shall be deemed approved and may be implemented by the health
maintenance organization.
§33-25A-4. Issuance of certificate of authority.
(1) Upon receipt of an application for a certificate of
authority, the commissioner shall determine whether the
application for a certificate of authority, with respect to
health care services to be furnished has demonstrated:
(a) The willingness and potential ability to assure that
basic health services will be provided in such a manner as to
enhance and assure both the availability and accessibility of adequate personnel and facilities;
(b) Arrangements for an ongoing evaluation of the quality of
health care;
(c) A procedure to develop, compile, evaluate and report
statistics relating to the cost of its operations, the pattern of
utilization of its services, the quality, availability and
accessibility of its services, and such other matters as may be
reasonably required by regulation.
(2) The commissioner shall issue or deny a certificate of
authority to any person filing an application within one hundred
twenty days after receipt of the application. Issuance of a
certificate of authority shall be granted upon payment of the
application fee prescribed, if the commissioner is satisfied that
the following conditions are met:
(a) The health maintenance organization's proposed plan of
operation meets the requirements of subsection (1) of this
section;
(b) The health maintenance organization will effectively
provide or arrange for the provision of at least basic health
care services on a prepaid basis except for copayments:
Provided, That nothing herein shall be construed to relieve a
health maintenance organization from the obligations to provide
health care services because of the nonpayment of copayments
unless the enrollee fails to make payment in at least three
instances over any twelve-month period: Provided, however, That
nothing herein shall permit a health maintenance organization to charge copayments to medicare beneficiaries or medicaid
recipients in excess of the copayments permitted under those
programs, nor shall a health maintenance organization be required
to provide services to such medicare beneficiaries or medicaid
recipients in excess of the benefits compensated under such
programs;
(c) The health maintenance organization is financially
responsible and may reasonably be expected to meet its
obligations to enrollees and prospective enrollees. In making
this determination, the commissioner may consider:
(i) The financial soundness of the health maintenance
organization's arrangements for health care services and proposed
schedule of charges used in connection therewith;
(ii) That the health maintenance organization shall have and
maintain fully paid in capital stock, if a for profit stock
corporation, or statutory surplus, funds, if a nonprofit
corporation, of at least one million dollars. In addition, each
such health maintenance organization shall have and maintain
additional surplus funds of at least one million dollars:
Provided, That health maintenance organizations duly licensed
under this article prior to the effective date of this section
whose fully paid-in capital stock and surplus requirements are
increased by virtue of this section shall be required to maintain
fully paid in capital stock, if a for profit stock corporation,
or statutory surplus funds, if a nonprofit corporation, be at
least two hundred fifty thousand dollars and additional surplus funds of two hundred fifty thousand dollars after the first day
of January, one thousand nine hundred ninety-two. Any such
corporation shall then be subject to the full paid-in capital and
surplus requirements of this section after the first day of
January, one thousand nine hundred ninety-four;
(iii) Any arrangements which will guarantee for the
continuation of benefits and payments to providers for services
rendered both prior to and after insolvency for the duration of
the contract period for which payment has been made, except that
benefits to members who are confined on the date of insolvency in
an inpatient facility shall be continued until their discharge
for a reasonable period of time the continued availability or
payment of the cost of health care services in the event of
discontinuance of the plan;
(iv) Any agreement with providers for the provision of
health care services; and
(d) Reasonable provisions have been made for emergency and
out-of-area health care services;
(e) The enrollees will be afforded an opportunity to
participate in matters of policy and operation pursuant to
section six of this article;
(f) The health maintenance organization has demonstrated
that it will assume full financial risk on a prospective basis
for the provision of health care services, including hospital
care: Provided, That the requirement of this subdivision shall
not prohibit a health maintenance organization from obtaining insurance or making other arrangements:
(i) For the cost of providing to any enrollee comprehensive
health maintenance care services, the aggregate value of which
exceeds four thousand dollars in any year;
(ii) For the cost of providing comprehensive health care
services to its members on a nonelective emergency basis, or
while they are outside the area served by the organization; or
(iii) For not more than ninety-five percent of the amount by
which the health maintenance organization's costs for any of its
fiscal years exceed one hundred five percent of its income for
such fiscal years.
(g) The ownership, control, and management of the entity is
competent and trustworthy and possesses managerial experience
that would make the proposed health maintenance organization
operation beneficial to the subscribers. The commissioner may,
at his or her discretion, refuse to grant or continue authority
to transact the business of a health maintenance organization in
this state at any time during which the commissioner has good
reason to believe that the ownership, control, or management of
the organization includes any person whose business operations
are or have been marked by business practices or conduct that is
to the detriment of the public, stockholders, investors, or
creditors.
(h) The health maintenance organization has deposited and
maintained in trust with the state treasurer, for the protection
of its subscribers or its subscribers and creditors, cash or government securities eligible for the investment of capital
funds of domestic insurers (of the type described in section
seven of article eight of this chapter) under this chapter in the
amount of one hundred thousand dollars.
(3) A certificate of authority shall be denied only after
compliance with the requirements of section twenty-one of this
article.
(4) Except as provided in subsection (2), section three
three-c of this article, no person who has not been issued a
certificate of authority shall use the words "health maintenance
organization" or the initials "HMO" in its name, contracts or
literature: Provided, That persons who are operating under a
contract with, operating in association with, enrolling enrollees
for, or otherwise authorized by a health maintenance organization
licensed under this article to act on its behalf may use the
terms "health maintenance organization" or "HMO" for the limited
purpose of denoting or explaining their association or
relationship with the authorized health maintenance organization.
No health maintenance organization which has a minority of board
members who are consumers shall use the words "consumer
controlled" in its name or in any way represent to the public
that it is controlled by consumers.
§33-25A-7. Fiduciary responsibilities of officers; approval of
contracts by commissioner.
(a) Any director, officer or partner of a health maintenance
organization who receives, collects, disburses or invests funds in connection with the activities of such organization shall be
responsible for such funds in a fiduciary relationship to the
enrollees.
(b) Any contracts made with providers of health care
hospitals and practitioners of medical, dental and related
services enabling a health maintenance organization to provide
health care services authorized under this article shall be filed
with the commissioner. The commissioner shall have power to
require immediate cancellation renegotiation of such contracts
whenever he determines that they provide for excessive payments,
or that they fail to include reasonable incentives for cost
control, or that they otherwise substantially and unreasonably
contribute to escalation of the costs of providing health care
services to enrollees.
(c) The commissioner may require a health maintenance
organization to submit any contract for administrative services,
contract for management services, and contract with an affiliated
entity.
(d) After review of a contract the commissioner may order
the health maintenance organization to cancel the contract in
accordance with the terms of the contract and applicable law if
it determines that the fees to be paid by the health maintenance
organization under the contract are so unreasonably high as
compared with similar contracts entered into by the health
maintenance organization or as compared with similar contracts
entered into by other health maintenance organizations in similar circumstances that the contract is detrimental to the
subscribers, stockholders, investors, or creditors of the health
maintenance organization.
(e) All contracts for administrative services, management
services, provider services other than individual physician
contracts, and with affiliated entities entered into or renewed
by a health maintenance organization on or after the fifteenth
day of April, one thousand nine hundred and ninety-five, shall
contain a provision that the contract shall be canceled upon
issuance of an order by the commissioner pursuant to this
section.
§33-25A-7a. Provider Contracts.
(1) Whenever a contract exists between a health maintenance
organization and a provider and the organization fails to meet
its obligations to pay fees for services already rendered to a
subscriber, the health maintenance organization shall be liable
for such fee or fees rather than the subscriber; and the contract
shall so state.
(2) No subscriber of an HMO shall be liable to any provider
of health care services for any services covered by the HMO if at
any time during the provision of such services, the provider, or
its agents, are aware the subscriber is an HMO enrollee.
(3) No provider of services or any representative of such
provider shall collect or attempt to collect from an HMO
subscriber any money for services covered by an HMO and no
provider or representative of such provider may maintain any action at law against a subscriber of an HMO to collect money
owed to such provider by an HMO.
(4) Every contract between an HMO and a provider of health
care services shall be in writing and shall contain a provision
that the subscriber shall not be liable to the provider for any
services covered by the subscriber's contract with the HMO.
(5) The provisions of this section shall not be construed to
apply to the amount of any deductible or copayment which is not
covered by the contract of the HMO.
(6) For all provider contracts executed on or after the
fifteenth day of April, one thousand nine hundred ninety-five and
within one hundred eighty days of said date for contracts in
existence on that date:
(a) The contracts must provide that the provider shall
provide sixty days advance written notice to the health
maintenance organization and the commissioner before canceling
the contract with the health maintenance organization for any
reason; and
(b) The contract must also provide that nonpayment for goods
or services rendered by the provider to the health maintenance
organization shall not be a valid reason for avoiding the sixty
day advance notice of cancellation.
(7) Upon receipt by the health maintenance organization of
a sixty day cancellation notice, the health maintenance
organization may, if requested by the provider, terminate the
contract in less than sixty days if the health maintenance organization is not financially impaired or insolvent.
§33-25A-8. Evidence of coverage; charges for health care
services; cancellation of contract by enrollee.
(1)(a) Every enrollee is entitled to evidence of coverage in
accordance with this section. The health maintenance
organization or its designated representative shall issue the
evidence of coverage.
(b) No evidence of coverage, or amendment thereto, shall be
issued or delivered to any person in this state until a copy of
the form of the evidence of coverage, or amendment thereto, has
been filed with and approved by the commissioner.
(c) An evidence of coverage shall contain a clear, concise
and complete statement of:
(i) The health care services and the insurance or other
benefits, if any, to which the enrollee is entitled;
(ii) Any exclusions or limitations on the services, kind of
services, benefits, or kind of benefits, to be provided,
including any copayments;
(iii) Where and in what manner information is available as
to how services, including emergency and out-of-area services,
may be obtained;
(iv) The total amount of payment and copayment, if any, for
health care services and the indemnity or service benefits, if
any, which the enrollee is obligated to pay with respect to
individual contracts, or an indication whether the plan is
contributory or noncontributory with respect to group certificates; and
(v) A description of the health maintenance organization's
method for resolving enrollee complaints.
(d) Any subsequent approved change in an evidence of
coverage shall be issued to each enrollee.
(e) A copy of the form of the evidence of coverage to be
used in this state, and any amendment thereto, shall be subject
to the filing and approval requirements of subdivision (b),
subsection (1) of this section, unless the commissioner
promulgates a regulation dispensing with this requirement or
unless it is subject to the jurisdiction of the commissioner
under the laws governing health insurance or, hospital or
medical service corporations, in which event the filing and
approval provisions of such laws shall apply. To the extent,
however, that such provisions do not apply the requirements in
subdivision (c), subsection (1) of this section, shall be
applicable.
(2) Such charges Premiums may be established in accordance
with actuarial principles: Provided, That premiums shall not be
excessive, inadequate, or unfairly discriminatory. A
certification by a qualified actuary shall accompany the filing
and, shall certify that: The rates are neither inadequate nor
excessive nor unfairly discriminatory; that the rates are
appropriate for the classes of risks for which they have been
computed; provide an adequate description of the rating
methodology showing that such methodology follows consistent and equitable actuarial principles; and the rates being charged are
actuarially adequate to the end of the period for which rates
have been guaranteed. to the appropriateness of the charges based
on reasonable assumptions shall accompany the filing along with
adequate supporting information. In determining whether such
charges are reasonable, the commissioner shall consider whether
such health maintenance organization has (a) made a vigorous,
good faith effort to control rates paid to health care providers;
(b) established a premium schedule, including copayments, if any,
which encourages enrollees to seek out preventive health care
services; and (c) has made a good faith effort to secure
arrangements whereby basic services can be obtained by
subscribers from all local providers to the extent that such
providers offer such services.
(3) Rates are inadequate if the premiums derived from the
rating structure, plus investment income, co-payments, and
revenues from coordination of benefits and subrogation,
fees-for-service and reinsurance recoveries are not set at a
level at least equal to the anticipated cost of medical and
hospital benefits during the period for which the rates are to be
effective, and the other expenses which would be incurred if
other expenses were at the level for the current or nearest
future period during which the HMO is projected to make a profit.
For this analysis, investment income shall not exceed three
percent of total projected revenues.
(4) (3) The commissioner shall within a reasonable period approve any form if the requirements of subsection (1) are met
and any schedule of charges if the requirements of subsection (2)
are met. It shall be unlawful to issue such form or to use such
schedule of charges until approved. If the commissioner
disapproves of such filing, he shall notify the filer promptly.
In the notice, the commissioner shall specify the reasons for his
or her disapproval and the findings of fact and conclusions which
support his or her reasons. A hearing will be granted by the
commissioner within fifteen days after a request in writing, by
the person filing, has been received by the commission. If the
commissioner does not disapprove any form or schedule of charges
within sixty days of the filing of such forms or charges, they
shall be deemed approved.
(5) (4) The commissioner may require the submission of
whatever relevant information in addition to the schedule of
charges which he deems necessary in determining whether to
approve or disapprove a filing made pursuant to this section.
(6) (5) An enrollee shall be allowed to cancel a contract
with a health maintenance organization at any time for any reason
provided that a health maintenance organization may require that
he or she give sixty days notice of disenrollment to such
organization.
§33-25A-9. Annual report.
(1) Every health maintenance organization shall annually, on
or before the first day of March, file a report verified by at
least two principal officers with the commissioner, covering the preceding calendar year. comply with and be subject to the
provisions of section fourteen, article four of this chapter
relating to filing of financial statements with the commissioner
and the national association of insurance commissioners. The
annual financial statement required by said section shall
include, but not be limited to, the following:
(2) Such report shall be required by section fourteen,
article four of this chapter and shall include:
(a) A statutory financial statement of the organization,
including its balance sheet and receipts and disbursements for
the preceding year certified by an independent certified public
accountant, reflecting at least: (i) All prepayment and other
payments received for health care services rendered; (ii)
expenditures to all providers, by classes or groups of
providers, and insurance companies or nonprofit health service
plan corporations engaged to fulfill obligations arising out of
the health maintenance contract; and (iii) expenditures for
capital improvements, or additions thereto, including, but not
limited to, construction, renovation or purchase of facilities
and capital equipment;
(b) The number of new enrollees enrolled during the year,
the number of enrollees as of the end of the year and the number
of enrollees terminated during the year on a form prescribed by
the commissioner;
(c) A summary of information compiled pursuant to
subdivision (c), subsection (1), section four of this article in such form as may be required by the department of health or other
accredited entity;
(d) A report of the names and residence addresses of all
persons set forth in subdivision (c), subsection (4), section
three of this article who were associated with the health
maintenance organization during the preceding year, and the
amount of wages, expense reimbursements, or other payments to
such individuals for services to the health maintenance
organization, including a full disclosure of all financial
arrangements during the preceding year required to be disclosed
pursuant to subdivision (c), subsection (4), section three of
this article; and
(e) Such other information relating to the performance of
the health maintenance organization as is reasonably necessary to
enable the commissioner to carry out his or her duties under this
article.
§33-25A-12. Complaint system.
(1) A health maintenance organization shall establish and
maintain a complaint system, which has been approved by the
commissioner, to provide adequate and reasonable procedures for
the expeditious resolution of written complaints initiated by
enrollees concerning any matter relating to any provisions of
such organization's health maintenance contracts, including, but
not limited to, claims regarding the scope of coverage for health
care services; denials, cancellations or nonrenewals of enrollee
coverage; observance of an enrollee's rights as a patient; and the quality of the health care services rendered.
(2) A detailed description of the HMO's subscriber grievance
procedure shall be included in all group and individual contracts
as well as any certificate or member handbook provided to
subscribers. This procedure shall be administered at no cost to
the subscriber. An HMO subscriber grievance procedure must
include the following:
(a) Both informal and formal steps shall be available to
resolve the grievance. A grievance is not considered formal
until a written complaint is executed by the subscriber or
completed on such forms as prescribed and received by the HMO;
(b) Each HMO shall designate at least one grievance
coordinator who will be responsible for the implementation of the
HMO's grievance procedure;
(c) Phone numbers shall be specified by the HMO for the
subscriber to call to present an informal grievance or to contact
the grievance coordinator. Each phone number shall be toll free
within the subscriber's geographic area and provide reasonable
access to the HMO without undue delays. There must be an adequate
number of phone lines to handle incoming grievances;
(d) An address shall be included for written grievances;
(e) Each level of the grievance procedure shall have some
person with problem solving authority to participate in each step
of the grievance procedure;
(f) The HMO shall process the formal written subscriber
grievance through all phases of the grievance procedure in a reasonable length of time not to exceed sixty days, unless the
subscriber and HMO mutually agree to extend the time frame. If
the complaint involves the collection of information outside the
service area, the HMO will have thirty additional days to process
the subscriber complaint through all phases of the grievance
procedure. The time limitations prescribed in this paragraph
requiring completion of the grievance process within sixty days
shall be tolled after the HMO has notified the subscriber, in
writing, that additional information is required in order to
properly complete review of the complaint. Upon receipt by the
HMO of the additional information requested, the time for
completion of the grievance process set forth herein shall
resume.
(g) The subscriber grievance procedure shall state that the
subscriber always has the right to appeal to the commissioner.
There shall be the additional requirement that subscribers under
a group contract between the HMO and a state agency shall first
appeal to the state agency responsible for administering the
relevant program, and if either of the two parties are not
satisfied with the outcome of such appeal, they may then appeal
to the commissioner. The HMO shall provide to the subscriber
written notice of the right to appeal upon completion of the full
grievance procedure and supply the commissioner with a copy of
the final decision letter;
(h) The HMO shall have physician involvement in reviewing
medically related grievances. Physician involvement in the grievance process should not be limited to the subscriber's
primary care physician, but may include at least one other
physician;
(i) The HMO shall offer to meet with the subscriber during
the formal grievance process. The location of the meeting shall
be at the administrative offices of the HMO within the service
area or at a location within the service area which is convenient
to the subscriber;
(j) The HMO may not establish time limits of less than one
year from the date of occurrence for the subscriber to file a
formal grievance;
(k) Each HMO shall maintain an accurate record of each
formal grievance. Each record shall include the following:
(i) A complete description of the grievance, the subscriber's
name and address, the provider's name and address and the HMO's
name and address; (ii) a complete description of the HMO's
factual findings and conclusions after completion of the full
formal grievance procedure; (iii) a complete description of the
HMO's conclusions pertaining to the grievance as well as the
HMO's final disposition of the grievance; and (iv) a statement as
to which levels of the grievance procedure the complaint has been
processed and how many more levels of the grievance procedure are
remaining before the complaint has been processed through the
HMO's entire grievance procedure.
A health maintenance organization shall give a timely and
reasoned response, in writing, to each written complaint it receives. Copies of such complaints and the responses thereto
shall be available to the commissioner, and the public for
inspection for three years.
(3) Any subscriber grievance that involves an issue that
poses an immediate threat to the health or safety of a subscriber
must be handled immediately. Each health maintenance organization
shall submit to the commissioner an annual report in a form
prescribed by the commissioner which describes such complaint
system and contains a compilation and analysis of the complaints
filed, their disposition, and their underlying causes.
(4) Any subscriber grievance that involves an issue that, if
not resolved immediately or if not resolved in a time period less
than that described in subdivision (f), subsection (2) of this
section, would pose a threat to the health, safety and welfare of
the subscriber or would otherwise aggravate the medical condition
of the subscriber must be handled within ten days.
§33-25A-14. Prohibited practices.
(1) No health maintenance organization, or representative
thereof, may cause or knowingly permit the use of advertising
which is untrue or misleading, solicitation which is untrue or
misleading, or any form of evidence of coverage which is
deceptive. For purposes of this article:
(a) A statement or item of information shall be deemed to be
untrue if it does not conform to fact in any respect which is or
may be significant to an enrollee of, or person considering
enrollment in, a health maintenance organization;
(b) A statement or item of information shall be deemed to be
misleading, whether or not it may be literally untrue, if, in the
total context in which such statement is made or such item of
information is communicated, such statement or item of
information may be reasonably understood by a reasonable person,
not possessing special knowledge regarding health care coverage,
as indicating any benefit or advantage or the absence of any
exclusion, limitation, or disadvantage of possible significance
to an enrollee of, or person considering enrollment in, a health
maintenance organization, if such benefit or advantage or absence
of limitation, exclusion or disadvantage does not in fact exist;
(c) An evidence of coverage shall be deemed to be deceptive
if the evidence of coverage taken as a whole, and with
consideration given to typography and format, as well as
language, shall be such as to cause a reasonable person, not
possessing special knowledge regarding health maintenance
organizations, and evidences of coverage therefor, to expect
benefits, services or other advantages which the evidence of
coverage does not provide or which the health maintenance
organization issuing such evidence of coverage does not regularly
make available for enrollees covered under such evidence of
coverage; and
(d) The commissioner may further define practices which are
untrue, misleading or deceptive.
(2) No health maintenance organization may cancel or fail to
renew the coverage of an enrollee except for: (a) Failure to pay the charge for health care coverage; (b) termination of the
health maintenance organization; (c) termination of the group
plan; (d) enrollee moving out of the area served; (e) enrollee
moving out of an eligible group; or (f) other reasons established
in regulations promulgated by the commissioner. No health
maintenance organization shall use any technique of rating or
grouping to cancel or fail to renew the coverage of an enrollee.
An enrollee shall be given thirty days' notice of any
cancellation or nonrenewal, including therein the reason
therefor: Provided, That each enrollee moving out of an eligible
group shall be granted the opportunity to enroll in the health
maintenance organization on an individual basis. A health
maintenance organization may not disenroll an enrollee for
nonpayment of copayments unless the enrollee has failed to make
payment in at least three instances over any twelve-month period;
however, the enrollee may not be disenrolled if the disenrollment
would constitute abandonment of a patient. Any enrollee
wrongfully disenrolled shall be reenrolled.
(3) No health maintenance organization may use in its name,
contracts or literature any of the words "insurance", "casualty",
"surety", "mutual" or any other words which are descriptive of
the insurance, casualty or surety business or deceptively similar
to the name or description of any insurance or surety corporation
doing business in this state: Provided, That when a health
maintenance organization has contracted with an insurance company
for any coverage permitted by this article, it may so state.
(4) The providers of under agreement with a health
maintenance organization who to provide health care services and
the health maintenance organization shall not have recourse
against enrollees for amounts above those specified in the
evidence of coverage as the periodic prepayment or copayment for
health care services.
(5) No health maintenance organization shall enroll more
than three hundred thousand persons in this state. The health
maintenance organization may petition the commissioner to exceed
three hundred thousand persons. The commissioner may allow the
health maintenance organization to exceed the three hundred
thousand person cap without notice and hearing, provided in his
or her sole discretion, the health maintenance organization has
shown cause and the commissioner has determined the proposed
increase in enrollment would be beneficial to the subscribers,
creditors and stockholders of the organization or would otherwise
increase the availability of coverage to the insurance buying
public of the state.
(6) No health maintenance organization shall discriminate in
enrollment policies or quality of services against any person on
the basis of race, sex, age, religion, place of residence, health
status or source of payment: Provided, That differences in rates
based on valid actuarial distinctions, including, distinctions
relating to age and sex, shall not be considered discrimination
in enrollment policies.
(7) No agent of a health maintenance organization or person selling enrollments in a health maintenance organization shall
sell an enrollment in a health maintenance organization unless
such agent or person shall first disclose in writing to the
prospective purchaser the following information using the
following exact terms in bold print: (a) "Services offered,"
including any exclusions or limitations; (b) "full cost,"
including copayments; (c) "facilities available and hours of
services"; (d) "transportation services"; (e) "disenrollment
rate"; and (f) "staff," including the names of all full-time
staff physicians, consulting specialists, hospitals and
pharmacies associated with the health maintenance organization.
In any home solicitation, any three-day cooling-off period
applicable to consumer transactions generally shall apply in the
same manner as consumer transactions.
The form disclosure statement shall not be used in sales
until it has been approved by the commissioner or submitted to
the commissioner for ten sixty days without disapproval. Any
person who fails to disclose the requisite information prior to
the sale of an enrollment may be held liable in an amount
equivalent to one year's subscription rate to the health
maintenance organization, plus costs and a reasonable attorney's
fee.
(8) No contract with an enrollee shall prohibit an enrollee
from canceling his or her enrollment at any time for any reason
except that such contract may require thirty days' notice to the
health maintenance organization.
(9) Any person who in connection with an enrollment violates
any subsection of this section may be held liable for an amount
equivalent to one year's subscription rate, plus costs and a
reasonable attorney's fee.
§33-25A-15. Agent licensing and appointment required;
regulation of marketing.
(1) Health maintenance organizations are subject to the
provisions of article twelve of this chapter.
(2) After a subscriber signs an HMO enrollment application
and before the HMO can process the application changing or
initiating the subscriber coverage, each HMO must verify the
intent and desire of the individual subscriber to join the HMO.
The verification must be in writing and conducted by someone
outside the HMO's marketing department. Each verification shall
include the following:
(a) Confirmation that the subscriber intends and desires to
join the HMO;
(b) If the subscriber is a medicare or medicaid recipient,
confirmation must be provided that the subscriber understands by
joining the HMO they will be limited to the benefits provided by
the HMO, and medicare or medicaid will pay the HMO for the
subscriber coverage;
(c) Confirmation that the subscriber understands the
applicable restrictions of HMOs, especially that they must use
the HMO providers and secure approval from the HMO to use health
care providers outside the plan; and
(d) If the subscriber is a member of an HMO, confirmation
must be provided that the subscriber understands they are
transferring to another HMO.
(e) The HMO shall not pay a commission, fee, money or any
other form of scheduled compensation to any health insurance
agent until verification from the subscriber of their intent and
desire to enroll into the HMO has been secured and the enrollment
process has been completed. The HMO shall verify the intent of
the subscriber to enroll with a written notice to the subscriber
stating that they have transferred from their existing coverage
(i.e. from medicare, medicaid, another HMO, etc.) to the new HMO.
Each written verification notice shall be accompanied with
printed materials explaining the nature of the HMO and any
applicable restrictions and exclusions. The enrollment process
shall be deemed complete seven days after the HMO mails the
confirmation notice. Each HMO must notify the subscriber of the
date enrollment begins and when benefits will be available. Each
HMO is directly responsible for enrollment abuses.
(3) (1) The commissioner may, in his or her discretion,
after notice and hearing, promulgate rules and regulations as are
necessary to regulate marketing of health maintenance
organizations by persons compensated directly or indirectly by
such health maintenance organizations. When necessary such rules
and regulations may prohibit door-to-door solicitations, may
prohibit commission sales, and may provide for such other
proscriptions and other regulations as are required to effectuate the purposes of this article.
§33-25A-16. Powers of insurers and hospital and medical service
corporations.
(1) An insurance company licensed in this state or a
hospital or medical service corporation authorized to do business
in this state, after applying for and receiving a certificate of
authority as a health maintenance organization, may either
directly or through a subsidiary or affiliate organize and
operate a health maintenance organization under the provisions of
this article. Notwithstanding any other law which may be
inconsistent herewith, any two or more such insurance companies,
hospital or medical service corporations, or subsidiaries or
affiliates thereof, may jointly organize and operate a health
maintenance organization. The business of insurance is deemed
to include the providing of health care by a health maintenance
organization owned or operated by an insurer or a subsidiary
thereof.
(2) Notwithstanding any provision of insurance and hospital
or medical service corporation laws, an insurer or a hospital or
medical service corporation may contract with a health
maintenance organization to provide insurance or similar
protection against the cost of care provided through health
maintenance organizations and to provide coverage in the event of
the failure of the health maintenance organization to meet its
obligations. The enrollees of a health maintenance organization
constitute a permissible group under such laws. Among other things, under such contracts, the insurer or hospital or medical
service corporation may make benefit payments to health
maintenance organizations for health care services rendered by
providers.
`(3) Unless specifically permitted by state statute to do so
without such certificate of authority, any entity offering,
providing, arranging for or assuming risk for health care
services on a prepaid aggregate or prepaid fixed sum basis is
deemed to be a health maintenance organization and shall obtain
a certificate of authority from the commissioner before offering,
providing, arranging for or assuming risk for health care
services.
§33-25A-17. Examinations.
(1) The commissioner may make an examination of the affairs
of any health maintenance organization and providers with whom
such organization has contracts, agreements or other arrangements
as often as he deems it necessary for the protection of the
interests of the people of this state but not less frequently
than once every three years.
(2) The commissioner may shall contract with the department
of health or any entity contracted with by the department of
health which has been accredited by a nationally recognized
accrediting organization to make examinations concerning the
quality of health care services of any health maintenance
organization and providers with whom such organization has
contracts, agreements or other arrangements as often as it deems necessary for the protection of the interests of the people of
this state but not less frequently than once every three years:
Provided, That in making the foregoing examination, the
department of health or accredited entity shall utilize the
services of persons or organizations with demonstrable expertise
in assessing quality of health care.
(3) Every health maintenance organization and affiliated
provider shall submit its books and records to such examinations
and in every way facilitate them. For the purpose of
examinations, the commissioner and the department of health shall
have all powers necessary to conduct such examinations,
including, but not limited to, the power to issue subpoenas, the
power to administer oaths to, and examine the officers and agents
of the health maintenance organization and the principles of
such providers concerning their business.
(4) The health maintenance organization shall be subject to
the provisions of section nine, article two of this chapter in
regard to the expense and conduct of examinations.
(5) In lieu of such examination, the commissioner may accept
the report of an examination made by other states.
§33-25A-18. Suspension or revocation of certificate of
authority.
(1) The commissioner may suspend or revoke any certificate
of authority issued to a health maintenance organization under
this article if he finds that any of the following conditions
exist:
(a) The health maintenance organization is operating
significantly in contravention of its basic organization
document, in any material breach of contract with an enrollee, or
in a manner contrary to that described in and reasonably inferred
from any other information submitted under section three of this
article unless amendments to such submissions have been filed
with an approval of the commissioner;
(b) The health maintenance organization issues evidence of
coverage or uses a schedule of premiums for health care services
which do not comply with the requirements of section eight of
this article;
(c) The health maintenance organization does not provide or
arrange for basic health care services;
(d) The department of health or other accredited entity
certifies to the commissioner that: (i) The health maintenance
organization is unable to fulfill its obligations to furnish
health care services as required under its contract with
enrollees; or (ii) the health maintenance organization does not
meet the requirements of subsection (1), section four of this
article;
(e) The health maintenance organization is no longer
financially responsible and may reasonably be expected to be
unable to meet its obligations to enrollees or prospective
enrollees or is otherwise determined by the Commissioner to be in
a hazardous financial condition;
(f) The health maintenance organization has failed to implement a mechanism affording the enrollees an opportunity to
participate in matters of policy and operation under section six
of this article;
(g) The health maintenance organization has failed to
implement the complaint system required by section twelve of this
article in a manner to reasonably resolve valid complaints;
(h) The health maintenance organization, or any person on
its behalf, has advertised or merchandised its services in an
untrue, misrepresentative, misleading, deceptive or unfair
manner;
(i) The continued operation of the health maintenance
organization would be hazardous to its enrollees; or
(j) The health maintenance organization has otherwise failed
to substantially comply with this article.
(k) The health maintenance organization has violated a
lawful order of the commissioner.
(2) A certificate of authority shall be suspended or revoked
only after compliance with the requirements of section twenty-one
of this article.
(3) When the certificate of authority of a health
maintenance organization is suspended, the health maintenance
organization shall not, during the period of such suspension,
enroll any additional enrollees except newborn children or other
newly acquired dependents of existing enrollees, and shall not
engage in any advertising or solicitation whatsoever.
(4) When the certificate of authority of a health maintenance organization is revoked, such organization shall
proceed, immediately following the effective date of the order of
revocation, to terminate its affairs, and shall conduct no
further business except as may be essential to the orderly
conclusion of the affairs of such organization. It shall engage
in no further advertising or solicitation whatsoever. The
commissioner may, by written order, permit such further operation
of the organization as he may find to be in the best interests of
enrollees, to the end that enrollees will be afforded the
greatest practical opportunity to obtain continuing health care
coverage.
§33-25A-19. Rehabilitation, liquidation or conservation of
health maintenance organization.
Any rehabilitation, liquidation or conservation of a health
maintenance organization shall be deemed to be the
rehabilitation, liquidation or conservation of an insurance
company, and shall be the exclusive remedy for rehabilitation,
liquidation and conservation and shall be conducted under the
supervision of the commissioner pursuant to the law governing the
rehabilitation, liquidation or conservation of insurance
companies. The commissioner may apply for an order directing him
to rehabilitate, liquidate or conserve a health maintenance
organization upon any one or more grounds set out in the
vocational rehabilitation statutes or when, in his or her
opinion, the continued operation of the health maintenance
organization would be hazardous either to the enrollees or to the people of this state.
§33-25A-24. Statutory construction and relationship to other
laws.
(a) Except as otherwise provided in this article,
provisions of the insurance laws and provisions of hospital or
medical service corporation laws shall not be applicable to any
health maintenance organization granted a certificate of
authority under this article. This provision shall not apply to
an insurer or hospital or medical service corporation licensed
and regulated pursuant to the insurance laws or the hospital or
medical service corporation laws of this state except with
respect to its health maintenance corporation activities
authorized and regulated pursuant to this article.
(b) Factually accurate advertising or solicitation
regarding the range of services provided, the premiums and
copayments charged, the sites of services and hours of operation,
and any other quantifiable, nonprofessional aspects of its
operation by a health maintenance organization granted a
certificate of authority, or its representative shall not be
construed to violate any provision of law relating to
solicitation or advertising by health professions: Provided,
That nothing contained herein shall be construed as authorizing
any solicitation or advertising which identifies or refers to any
individual provider or makes any qualitative judgment concerning
any provider.
(c) Any health maintenance organization authorized under this article shall not be deemed to be practicing medicine and
shall be exempt from the provision of chapter thirty of this
code, relating to the practice of medicine.
(d) The provisions of section fifteen, article four
(general provisions); article six-c (guaranteed loss ratio);
article seven (assets and liabilities); article eight
(investments); article nine (administration of deposits); article
twelve (agents, brokers, solicitors and excess line); section
fourteen, article fifteen (individual accident and sickness
insurance); section sixteen, article fifteen (coverage of
children); section eighteen, article fifteen (equal treatment of
state agency); section nineteen, article fifteen (coordination of
benefits with medicaid); article fifteen-b (uniform health care
administration act); section three, article sixteen (required
policy provisions); section three-f, article sixteen (treatment
of temporomandibular disorder and craniomandibular disorder);
section eleven, article sixteen (coverage of children); section
thirteen, article sixteen (equal treatment of state agency);
section fourteen, article sixteen (coordination of benefits with
medicaid); article sixteen-a (group health insurance conversion);
article sixteen-c (small employer group policies); article
sixteen-d (marketing and rate practices for small employers);
article twenty-seven (insurance holding company systems); article
thirty-four-a (standards and commissioner's authority for
companies deemed to be in hazardous financial condition); article
thirty-five (criminal sanctions for failure to report impairment); and article thirty-seven (managing general agents);
and article thirty-nine (disclosure of material transactions)
shall be applicable to any health maintenance organization
granted a certificate of authority under this article. In
circumstances where such above code provisions made applicable to
health maintenance organizations by this section refer to the
"insurer", the "corporation" or words of similar import, such
language shall be construed to include health maintenance
organizations.
(e) Any long-term care insurance policy delivered or issued
for delivery in this state by a health maintenance organization
shall comply with the provisions of article fifteen-a of this
chapter.
§33-25A-25. Filings and reports as public documents.
All applications, filings and reports required under this
article shall be treated as public documents: Provided, That
where the provisions of other articles in this chapter are
applicable to health maintenance organizations, all applications,
filings and reports required under those articles shall be
afforded the level of confidentiality as provided in those
articles.
§33-25A-26. Confidentiality of medical information.
Any data or information pertaining to the diagnosis,
treatment or health of any enrollee or applicant obtained from
such person or from any provider by any health maintenance
organization shall be held in confidence and shall not be disclosed to any person except: (1) To the extent that it may be
necessary to facilitate an assessment of the quality of care
delivered pursuant to section seventeen of this article or to
review the complaint system pursuant to section twelve of this
article; (2) upon the express written consent of the enrollee or
legally authorized representative; (3) pursuant to statute or
court order for the production of evidence or the discovery
thereof; or (4) in the event of claim or litigation between such
person and the health maintenance organization wherein such data
or information is pertinent; or (5) to a state agency pursuant to
the terms of a group contract for the provision of health care
services between the HMO and the state agency. A health
maintenance organization shall be entitled to claim any statutory
privileges against such disclosure which the provider who
furnished such information to the health maintenance organization
is entitled to claim.
NOTE: The purpose of this bill is to strengthen the
authority of the state insurance commissioner (commissioner) to
regulate health maintenance organizations in this state and to
protect and safeguard the interests of policyholders and the
general public.
The bill adds and/or strengthens definitions of the
following terms: capitation; copayment; employer; health
maintenance organization; impaired; insolvent; uncovered
expenses; service area; surplus notes; and, qualified independent
actuary.
The bill adds a new section designated three-a which
establishes that a health maintenance organization must
acknowledge, prior to licensing, that the sole and exclusive
methods available for the supervision, rehabilitation or
liquidation of a health maintenance organization are those methods provided in article ten and article thirty-four of
chapter thirty-three.
Existing section three is designated three-b and amended to
require any organization assuming risk for health care services
on a prepaid per capita or prepaid aggregate fixed sum basis to
apply for a certificate of authority as a health maintenance
organization. This section is further amended to require
applicants for a certificate of authority to file biographical
affidavits and independent investigation reports on individuals
organizing the health maintenance organization and to submit a
feasibility study certified by an independent actuary and
certified public accountant as to the viability of the proposed
health maintenance organization.
Amendments to section four establish that prior to receiving
a certificate of authority: The health maintenance organization
must demonstrate that it has made adequate arrangements for
continuation of benefits to the end of the contract period in
case of insolvency; that the commissioner must be satisfied that
the competency and trustworthiness of management is beneficial to
the subscribers; and, that the health maintenance organization
must maintain a deposit of at least one hundred thousand dollars
with the commissioner in trust for the protection of its
subscribers and creditors.
Amendments to section seven strengthen the commissioner's
authority to review provider contracts, and to establish the
commissioner's authority to review administrative or management
contracts and contracts with affiliates.
A new section designated seven-a is added to establish
required provisions of contracts between a health maintenance
organization and providers of health care services. The new
section establishes that provider contracts must require sixty
days advance written notice of cancellation from the provider to
the health maintenance organization and that nonpayment for
services rendered is not a valid reason to avoid the sixty-day
notice.
Section eight is amended to require premium rate filings to
be accompanied by a certification by a qualified actuary that the
rates: Are neither inadequate, excessive or discriminatory; are
appropriate for the classes of risks; and, are adequate for the
period guaranteed. The actuary must also provide a description
of the rating methodology utilized. A definition of inadequate
rates is also added for clarification.
Section nine language requiring annual financial statement
filings is amended to clarify that health maintenance
organizations are subject to the same filing requirements all
insurers are subject to pursuant to the provisions of section fourteen, article four, chapter thirty-three.
Section twelve is amended by adding language that requires
health maintenance organizations to establish subscriber
grievance procedures.
Section fourteen is amended to allow the commissioner
authority to permit a health maintenance organization to exceed
the current three hundred thousand member limit.
Amendments to section fifteen increase consumer protection
by requiring a health maintenance organization to have personnel
outside the organization's marketing department review all
enrollment applications. Each health maintenance organization is
responsible for enrollment abuses.
The bill amends section sixteen to strengthen requirement of
a health maintenance organization, obtain a valid certificate of
authority prior to offering, providing, arranging for or assuming
risk for health care services.
Language is added to section seventeen that allows the
commissioner to utilize accredited entities that the Department
of Health has contracted with when performing examinations
concerning the quality of health care services provided by a
health maintenance organization.
Section eighteen is amended to strengthen the commissioner's
authority to suspend or revoke a health maintenance
organization's certificate of authority because the organization
is operating in a hazardous financial condition or has violated
a lawful order of the commissioner.
Section nineteen is amended to strengthen language stating
that the rehabilitation, liquidation or conservation of an
insurance company under this chapter is the exclusive remedy for
the rehabilitation, liquidation or conservation of a health
maintenance organization.
The bill amends section twenty-four to make the provisions
of articles nine, twelve and thirty-nine applicable to health
maintenance organizations.
A proviso is added to section twenty-five affording the same
level of confidentiality allowed in other articles of this
chapter to all filings required of a health maintenance
organization under the provisions of said other articles.
Section twenty-six is amended to allow confidential medical
information of an enrollee to be shared with a state agency that
has a group contract with a health maintenance organization to
provide health care services for the enrollee.
§33-25A-3a and 7a are new, therefore, strike-throughs and
underscoring have been omitted.