H. B. 4522
(By Delegate H. K. White)
[Introduced February 13, 2006; referred to the
Committee on Banking and Insurance then Finance.]
A BILL to amend and reenact §33-25A-3 of the Code of West Virginia,
1931, as amended, relating to removing the Commissioner of
Insurance as the attorney in fact for HMO's for service of
process purposes.
Be it enacted by the Legislature of West Virginia:
That §33-25A-3 of the Code of West Virginia, 1931, as amended,
be amended and reenacted to read as follows:
ARTICLE 25A. HEALTH MAINTENANCE ORGANIZATION ACT.
§33-25A-3. 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 as a health maintenance organization.
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.
(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 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 be treated as a health
maintenance organization whose certificate of authority has been
revoked: Provided, That all health maintenance organizations in
operation for at least five years are exempt from filing
applications for a new certificate of authority.
(3) The commissioner may require any organization providing or
arranging 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. The commissioner
shall promulgate rules to facilitate the enforcement of this
subsection: Provided, That any provider who is assuming risk by
virtue of a contract or other arrangement with a health maintenance
organization or entity which has a certificate, may not be required
to file for a certificate: Provided, however, That the commissioner may require the exempted entities to file complete financial data
for a determination as to their solvency. Any organization
directed to apply for a certificate of authority is 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;
(c) A list of 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 the officer or
member of the governing body or any provider or any organization or
corporation owned or controlled by that person and the health
maintenance organization and the extent and nature of any contract
or financial arrangements between that person and the health
maintenance organization;
(d) A 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 the applicant, if not
domiciled in this state, appointing the commissioner and his or her
successors in office, and duly authorized deputies, as the true and
lawful attorney of the 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) (h) A statement reasonably describing the service area or
areas to be served and the type or types of enrollees to be served;
(j) (i) A description of the complaint procedures to be
utilized as required under section twelve of this article;
(k) (j) 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;
(l) (k) 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
subsection and all officers, directors and persons holding five percent or more of the common stock of the organization;
(m) (l) A comprehensive feasibility study, performed by a
qualified independent 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 independent 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: Provided, That the certification shall
include an adequate description of the rating methodology showing
that the methodology follows consistent and equitable actuarial
principles; the health maintenance organization is actuarially
sound: Provided, however, That the 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;
(n) (m) A description of the health maintenance organization's
quality assurance program; and
(o) (n) Such other information as the commissioner may require
to be provided.
(5) A health maintenance organization shall, unless otherwise
provided for by rules 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
rule. If the commissioner does not disapprove of the filing within
ninety days of filing, it shall be considered approved and may be
implemented by the health maintenance organization.
NOTE: The purpose of this bill is to remove the Commissioner
of Insurance as the attorney in fact for HMO's for service of
process purposes.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.