Senate Bill No. 576
(By Senators McCabe and Minard)
[Originating in the Committee on the Judiciary;
reported March 25, 2005.]
A BILL to amend and reenact §33-25D-2 of the Code of West Virginia,
1931, as amended, relating to Prepaid Limited Health Service
Organizations Act; adding pharmaceutical services, vision care
services, dental care services and podiatric care services to
the definition of "limited health service"; and authorizing
the Insurance Commissioner to add other services to such
Be it enacted by the Legislature of West Virginia:
That §33-25D-2 of the Code of West Virginia, 1931, as amended,
be amended and reenacted to read as follows:
ARTICLE 25D. PREPAID LIMITED HEALTH SERVICE ORGANIZATION ACT.
(a) "Capitation" means the fixed amount paid by a prepaid
limited health service organization to a health care provider under
contract with the prepaid limited health service organization in
exchange for the rendering of no more than four limited health services.
(b) "Commissioner" means the Commissioner of Insurance.
(c) "Consumer" means any person who is not a provider of care
or an employee, officer, director or stockholder of any provider of
(d) "Coordinating provider" means the provider of a particular
limited health service who is chosen or designated for each
subscriber and who will be responsible for coordinating the
provision of that particular limited health service to the
subscriber, including necessary referrals to other providers of the
limited health service: Provided,
That if a subscriber is also
enrolled in a health maintenance organization, the coordinating
provider shall send a written report at least annually to the
subscriber's primary care physician, as defined in article
twenty-five-a of this chapter, describing the limited health
service provided to the subscriber: Provided, however,
coordinating provider may disclose data or information only as
permitted under section twenty-eight of this article.
(e) "Copayment" means a specific dollar amount, except as
by statute, that the subscriber must pay
upon receipt of covered limited health services and which is set at
an amount consistent with allowing the subscriber access to covered
limited health services.
(f) "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 is done.
(g) "Employer" means any individual, corporation, partnership,
other private association or state or local government that employs
the equivalent of at least two full-time employees during any four
consecutive calendar quarters.
(h) "Enrollee", "subscriber" or "member" means an individual
who has been voluntarily enrolled in a prepaid limited health
service organization, including individuals on whose behalf a
contractual arrangement has been entered into with a prepaid
limited health service organization to receive no more than four
limited health services.
(i) "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.
(j) "Group practice" means a professional corporation,
partnership, association or other organization composed solely of
health professionals licensed to practice medicine or osteopathy
and of such other licensed health professionals, including
podiatrists, dentists, optometrists and chiropractors, as are
necessary for the provision of limited health services for which
the group is responsible:
(1) A majority of the members of which are licensed to
practice medicine, osteopathy or chiropractic;
(2) Who as their principal professional activity engage in the
coordinated practice of their profession;
(3) Who 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
(4) Who share medical and other records and substantial
portions of major equipment and professional, technical and
(k) "Impaired" means a financial situation in which, based
upon the financial information which would be required by this
chapter for the preparation of the prepaid limited health service
organization's annual statement, the assets of the prepaid limited
health service organization are less than the sum of all of its
liabilities and required reserves including any minimum capital and
surplus required of the prepaid limited health service organization
by this chapter so as to maintain its authority to transact the
kinds of business or insurance it is authorized to transact.
(l) "Individual practice arrangement" means any agreement or
arrangement to provide medical services on behalf of a prepaid
limited health service organization among or between providers or
between a prepaid limited health service organization and
individual providers or groups of providers, where the providers
are not employees or partners of the prepaid limited health service
organization and are not members of or affiliated with a group
(m) "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 prepaid limited health service organization's annual statement, the assets of the prepaid
limited health service organization are less than the sum of all of
its liabilities and required reserves.
(n) "Limited health service" means dental care services,
vision care services, pharmaceutical services, podiatric care
services, clinic-based health care services where subscribers pay
monthly subscription fees,
mental or behavioral health services
(including mental illness, mental retardation, developmental
disabilities, substance abuse and chemical dependency) and any
other services as may be determined by the Commissioner to be
limited health services
, together with any services or goods
included in the furnishing to any individual of a limited health
service. "Limited health service" does not include inpatient
services, hospital surgical services or emergency services except
as such services are provided incident to and directly related to
a limited health service set forth in this subsection.
(o) "Premium" means a 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 prepaid
limited health service organization for health services provided to
(p) "Prepaid limited health service organization" means a
public or private organization which provides, or otherwise makes
available to enrollees, no more than four limited health services
(1) Receives premiums for the provision of no more than four limited health services to enrollees on a prepaid per capita or
prepaid aggregate fixed sum basis, excluding copayments;
(2) Provides no more than four limited health services
(A) Directly through an exclusive panel of physicians or other
providers who are employees or partners of the organization;
(B) Through arrangements with individual physicians or other
providers or one or more groups of physicians or other providers
organized on a group practice or individual practice arrangement;
(C) Some combination of paragraphs (A) and (B) of this
(3) Assures the availability, accessibility and quality,
including effective utilization, of the limited health service or
services that it provides or makes available through clearly
identifiable focal points of legal and administrative
(4) Offers services through an organized delivery system, in
which a coordinating provider of a limited health service is
designated for each subscriber to that limited health service.
Prepaid limited health service organization does not include
an entity otherwise authorized pursuant to the laws of this state
to indemnify for any limited health service, or a provider or
entity when providing a limited health service pursuant to a
contract with a prepaid limited health service organization, a
health maintenance organization, a health insurer or a self-insurance plan.
(q) "Provider" means any physician or other person or
organization licensed or otherwise authorized in this state to
furnish a limited health service.
(r) "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 prepaid
limited health service organizations and who has no financial or
employment interest in the prepaid limited health service
(s) "Quality assurance" means an ongoing program designed to
objectively and systematically monitor and evaluate the quality and
appropriateness of the enrollee's care, pursue opportunities to
improve the enrollee's care and resolve identified problems at the
prevailing professional standard of care.
(t) "Service area" means the county or counties approved by
the Commissioner within which the prepaid limited health service
organization may provide or arrange for a limited health service to
be available to its subscribers.
(u) "Statutory surplus" means the minimum amount of
unencumbered surplus which a corporation must maintain pursuant to
the requirements of this article.
(v) "Surplus" means the amount by which a corporation's assets
exceed its liabilities and required reserves based upon the
financial information which would be required by this chapter for
the preparation of the corporation's annual statement except that assets pledged to secure debts not reflected on the books of the
prepaid limited health service organization shall not be included
(w) "Surplus notes" means debt which has been subordinated to
all claims of subscribers and all creditors of the organization.
(x) "Uncovered expenses" means the cost of a limited health
service covered by a prepaid limited health service organization
for which a subscriber would also be liable in the event of the
insolvency of the organization.
(y) "Utilization management" means a system for the evaluation
of the necessity, appropriateness, and efficiency of the use of
health care services, procedures and facilities.
(NOTE: The purpose of this bill is to include additional
services, such as dental care, vision care, pharmaceutical,
podiatric care to the definition of a "limited health service". It
would also allow the Insurance Commissioner to add other services.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would