Senate Bill No. 336
(By Senators Tomblin (Mr. President) and Boley
By Request of the Executive)
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[Introduced February 8, 1996; referred to the Committee
on Health and Human Resources.]
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A BILL to amend and reenact sections two, three, three-a, four,
seven, seven-a, eight, nine, ten, eleven, fourteen, fifteen,
seventeen, eighteen, twenty-two and twenty-four, 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 a new
section, designated section seventeen-a, all relating to
health maintenance organizations and rural health
maintenance organizations; definitions; application for
certificate of authority; conditions precedent to issuance
or maintenance of a certificate of authority; renewal of
certificate of authority; issuance of certificate of authority; fidelity bond; provider contracts; evidence of
coverage; annual report; information to enrollees; open
enrollment period; prohibited practices; regulation of
marketing; examinations; quality assurance; suspension or
revocation of certificate of authority; fees; statutory
construction; and relationship to other laws.
Be it enacted by the Legislature of West Virginia:
That sections two, three, three-a, four, seven, seven-a,
eight, nine, ten, eleven, fourteen, fifteen, seventeen, eighteen,
twenty-two and twenty-four, article twenty-five-a, chapter
thirty-three of the code of West Virginia, one thousand nine
hundred thirty-one, as amended, be amended and reenacted; and
that said article be further amended by adding thereto a new
section, designated section seventeen-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) "Commissioner" means the commissioner of insurance.
(4) "Consumer" means any person who is not a provider of
care or an employee, officer, director or stockholder of any
provider of care.
(5) "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 and which is set at
an amount consistent with allowing subscriber access to health
care services.
(6) "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) "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.
(8) "Enrollee," "subscriber," or "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) "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) "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 the care or hospitalization, osteopathic services, home
health, health education, or 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) "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 which:
(a) Receives premiums for the provision of basic health care
services to enrollees on a prepaid per capita or prepaid
aggregate fixed sum basis, excluding copayments;
(b) Provides physicians' services primarily (i) directly
through physicians who are either employees or partners of the
organization, or (ii) through arrangements with individual
physicians or one or more groups of physicians organized on a
group practice or individual practice arrangement, or (iii)
through some combination of paragraphs (i) and (ii) of this
subdivision;
(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; and
(d) Offers services through an organized delivery system, in
which a primary care 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:
Provided, That when dental care is provided by the health
maintenance organization the dentist selected by the subscriber
from the list provided by the health maintenance organization
shall coordinate the covered dental care of the subscriber, as
approved by the primary care physician or the health maintenance
organization.
(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 authorized to transact.
(13) "Individual practice arrangement" 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 the 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) "Medical group" or "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 and optometrists,
as are necessary for the provision of health services for which
the group is responsible: (a) A majority of the members of which
are licensed to practice medicine or osteopathy; (b) who as their
principal professional activity engage in the coordinated
practice of their profession; (c) 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 (e) who share medical and other records and
substantial portions of major equipment and professional,
technical and administrative staff.
(16) "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 health maintenance organization for health services
provided to an enrollee.
(17) "Primary care physician" means the general
practitioner, family practitioner, obstetrician/gynecologist,
pediatrician, or specialist in general internal medicine who is
chosen or designated for each subscriber who will be responsible
for coordinating the health care of the subscriber, including
necessary referrals to other providers: Provided, That with
respect to medicaid recipients enrolled under a group contract
between a health maintenance organization and the governmental
agency responsible for administering the medicaid program, a
certified nurse midwife may be chosen or designated as a
subscriber's primary care physician during the subscriber's
pregnancy and for a period extending through the end of the month
in which the sixty-day period following termination of pregnancy ends: Provided, however, That nothing in this subsection shall
expand the scope of practice for certified nurse midwives as
defined in article fifteen, chapter thirty of this code.
(18) "Provider" means any physician, hospital or other
person or organization which is licensed or otherwise authorized
in this state to furnish health care services.
(19) "Rural health maintenance organization" or "RHMO" means
a health maintenance organization as defined in subsection eleven
of this section which meets all requirements of this article for
a health maintenance organization, unless expressly subject to an
alternate requirement, and all requirements of this article for
a rural health maintenance organization.
(19) (20) "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.
(20) (21) "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.
(21) (22) "Statutory surplus" means the minimum amount of unencumbered surplus which a corporation must maintain pursuant
to the requirements of this article.
(22) (23) "Surplus" means the amount by which a
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 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.
(23) (24) "Surplus notes" means debt which has been
subordinated to all claims of subscribers and general creditors
of the organization.
(24) (25) "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.
(26) "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 to resolve identified problems at the prevailing professional standard of
care.
(27) "Utilization management" means a system for the
evaluation of the necessity, appropriateness, and efficiency of
the use of health care services, procedures and facilities.
§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 or as a rural 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 or as a rural
health maintenance organization under this article: Provided,
That a rural health maintenance organization may not enroll more
than ten thousand enrollees until it has been granted a
certificate of authority as a health maintenance organization
pursuant to section four of this article: Provided, however,
That a rural health maintenance organization shall, within sixty
days of the date on which its capital or statutory surplus
requirement under subsection two, section four of this article, equals or exceeds one million dollars, apply for a certificate of
authority as a health maintenance organization pursuant to
section four of this article. 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 an HMO or entity which has a
certificate, may not be required to file for a certificate:
Provided, however, That the commissioner may require such
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) A statement reasonably describing the service area or
areas to be served and the type or types of enrollees to be
served: Provided, That an organization seeking a certificate of
authority as a rural health maintenance organization may serve no
more than five contiguous counties in which the population of
each county to be served does not exceed forty-five thousand
persons and the combined population of all counties to be served
does not exceed one hundred thousand persons;
(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;
(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 or
more of the common stock of the organization;
(m) 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; and
(n) A description of the health maintenance organization's
quality assurance program;
(o) A copy of the current quality assurance report submitted
to the health maintenance organization by a nationally recognized
accreditation and review organization pursuant to section
seventeen-a of this article, or in the case of an application for
an initial certificate of authority, an opinion by such
nationally recognized accreditation and review organization as to
the feasibility of the health maintenance organization's proposed
quality assurance program: Provided, That in those instances
where a health maintenance organization has timely applied for
and reasonably pursued a review of its quality assurance program,
but a quality assurance report or opinion has not been issued by
the accreditation and review organization, the HMO shall submit
to the commissioner proof of such application for review; and
(n) (p) 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.
§33-25A-3a. Conditions precedent to issuance or maintenance of
a certificate of authority; renewal of 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; and
(b) A waiver of any right to file or be subject to a
bankruptcy proceeding;
(c) Within thirty days of any change in the membership of
the governing body of the organization or in the officers or
persons holding five percent or more of the common stock of the
organization, or as otherwise required by the commissioner:
(i) An amended list of the names, addresses and official
positions of each member of the governing body, and a full
disclosure of any financial interest by a 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; and
(ii) A complete biographical statement on forms prescribed
by the commissioner and an independent investigation report on
each such person for whom a biographical statement and
independent investigation report have not previously been
submitted; and
(d) Effective the first day of May, one thousand nine hundred ninety-eight, a copy of the current quality assurance
report submitted to the health maintenance organization by a
nationally recognized accreditation and review organization
approved by the commissioner, or in the case of the issuance of
an initial certificate of authority to a health maintenance
organization, an opinion by a nationally recognized accreditation
and review organization approved by the commissioner as to the
feasibility of the health maintenance organization's proposed
quality assurance program: Provided, That in those instances
where a health maintenance organization has timely applied for
and reasonably pursued a review of its quality assurance program,
but a quality assurance report or opinion has not been issued by
the accreditation and review organization, the HMO shall submit
to the commissioner proof of such application for review.
(2) After the effective date of this section, as a condition
precedent to the issuance of a certificate of authority, any
organization that has not yet obtained a certificate of authority
to operate a health maintenance organization in this state shall
be incorporated under the provisions of article one, chapter
thirty-one of this code.
(3) After the effective date of this subsection, all certificates of authority issued to health maintenance
organizations shall expire at midnight on the thirty-first day
of May of each year. The commissioner shall renew annually the
certificates of authority of all health maintenance organizations
that continue to meet all requirements of this section and
subsection (2), section four of this article, make application
therefor upon a form prescribed by the commissioner and pay the
renewal fee prescribed: Provided, That a health maintenance
organization shall not qualify for renewal of its certificate of
authority if the organization has no subscribers in this state
within twelve months after issuance of the certificate of
authority: Provided, however, That an organization not
qualifying for renewal may apply for a new certificate of
authority under section three of this article.
(3) (4) 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; and
(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.
(4) (5) If the bankruptcy proceeding is initiated by a party
other than the health maintenance organization, the operation of
subsection (2) (4) of this section shall be stayed for a period
of sixty days following the date of commencement of the
proceeding.
§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 of the
organization 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 provided by the organization and utilization review
which meet such standards as the commissioner shall by rule
require; and
(c) That the organization has 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 rule.
(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 in this section 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 in this section 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 the medicare beneficiaries or
medicaid recipients in excess of the benefits compensated under
those 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 the
proposed schedule of charges used in connection with the health
care services;
(ii) That the health maintenance organization has and
maintains 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: Provided, That a
rural 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 the
greater of five hundred thousand dollars or twenty-five percent
of its expenses for the previous twelve-month period as reported
in its most recent financial statement filed pursuant to
subsection (1), section nine of this article: Provided, however,
That if a rural health maintenance organization's paid-in capital
or statutory surplus equals or exceeds one million dollars, the
organization shall be subject to all requirements of this article
for a health maintenance organization other than a rural health
maintenance organization. In addition, each health maintenance
organization shall have and maintain additional surplus funds of
at least one million dollars;
(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; and
(iv) Any agreement with providers for the provision of
health care services;
(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, notwithstanding the requirement of this
subdivision, shall not prohibit a health maintenance organization
may, and a rural health maintenance organization shall, from
obtaining insurance acceptable to the commissioner from an
insurer licensed in this state or making make other arrangements:
(i) For the cost of providing to any enrollee health care
services, the aggregate value of which exceeds four thousand
dollars in any year;
(ii) For the cost of providing health care services to its
members on a nonelective emergency basis, or while they are
outside the area served by the organization; or and
(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
those fiscal years: Provided, That a rural health maintenance
organization shall obtain insurance for one hundred percent of
the amount by which its costs for any of its fiscal years exceed
one hundred five percent of its income for those fiscal years;
(g) The ownership, control and management of the
organization 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 probable cause 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 as described in section seven, article
eight of this chapter in the amount of one hundred thousand
dollars.
(i) The health maintenance organization has a quality
assurance program which has been reviewed by the commissioner or
by a nationally recognized accreditation and review organization
approved by the commissioner; meets at least those standards set
forth in section seventeen-a of this article; and is deemed
satisfactory by the commissioner: Provided, That in those
instances where a health maintenance organization has timely
applied for and reasonably pursued a review of its quality
assurance program, but such review has not been completed, the
HMO shall submit proof to the commissioner of its application for
such review.
(3) A certificate of authority shall be denied only after
compliance with the requirements of section twenty-one of this
article.
(4) No person who has not been issued a certificate of
authority shall use the words "health maintenance organization"
or "rural health maintenance organization" or the initials "HMO"
or "RHMO" in its name, contracts, logo 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," "rural health maintenance
organization," or "HMO" or "RHMO" for the limited purpose of
denoting or explaining their association or relationship with the
authorized health maintenance organization: Provided, however,
That a rural health maintenance organization may not use the
terms "health maintenance organization" or "HMO" in its name or
to refer to itself in its contracts, logo or literature unless
it is modified by the word "rural." 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; fidelity
bond; 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 the organization is responsible for the funds in a fiduciary relationship to the
enrollees.
(b) A health maintenance organization shall maintain a
blanket fidelity bond covering all directors, officers, managers
and employees of the organization who receive, collect, disburse
or invest funds in connection with the activities of the
organization, issued by an insurer licensed in this state or, if
the fidelity bond required by this subdivision is not available
from an insurer licensed in this state, a fidelity bond procured
by an excess line broker licensed in this state, in an amount at
least equal to the minimum amount of fidelity insurance as
provided in the National Association of Insurance Commissioners
Handbook, as amended, or as determined under a rule promulgated
by the commissioner.
(b) (c) Any contracts made with providers of health care
services enabling a health maintenance organization to provide
health care services authorized under this article shall be filed
with the commissioner. The commissioner has the power to require
immediate cancellation of the contracts or the immediate
renegotiation of the contract by the parties whenever he or she
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.
§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 is liable for the
fee or fees rather than the subscriber; and the contract shall
state that liability.
(2) No subscriber of an HMO is liable to any provider of
health care services for any services covered by the HMO if at
any time during the provision of the services, the provider, or
its agents, are aware the subscriber is an HMO enrollee.
(3) No If at any time during the provision of the services,
a provider, or its agents, are aware that the subscriber is an
HMO enrollee, such provider of services or any representative of
the provider shall may not collect or attempt to collect from an
HMO subscriber any money for services covered by an HMO and no
provider or representative of the provider may maintain any action at law against a subscriber of an HMO to collect money
owed to the 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 is not 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 that 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 is not 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; review of enrollee records; 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 grievances; and
(vi) The following exact statement in bold print: "Each
subscriber or enrollee, by acceptance of the benefits described
in this evidence of coverage, shall be deemed to have consented
to the examination of his or her medical records for purposes of
utilization review, quality assurance and peer review by the
health maintenance organization or its designee."
(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, is subject to the
filing and approval requirements of subdivision (b), subsection
(1) of this section, unless the commissioner promulgates a rule
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 those laws apply. To
the extent, however, that those provisions do not apply the
requirements in subdivision (c), subsection (1) of this section,
are applicable.
(2) 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 independent actuary shall accompany a rate 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 the 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. In determining whether the charges are
reasonable, the commissioner shall consider whether the 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) made a good faith effort to secure arrangements
whereby basic services can be obtained by subscribers from local
providers to the extent that the providers offer the 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) The commissioner shall within a reasonable period
approve any form if the requirements of subsection (1) of this
section are met and any schedule of charges if the requirements
of subsection (2) of this section are met. It is unlawful to
issue the form or to use the schedule of charges until approved.
If the commissioner disapproves of the filing, he or she 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 the forms or charges, they shall be considered
approved.
(5) The commissioner may require the submission of whatever
relevant information in addition to the schedule of charges which
he or she considers necessary in determining whether to approve
or disapprove a filing made pursuant to this section.
(6) An individual enrollee may cancel a contract with a health maintenance organization at any time for any reason:
Provided, That a health maintenance organization may require that
the enrollee give sixty thirty days advance notice: Provided,
however, That an individual enrollee whose premium rate was
determined pursuant to a group contract may cancel a contract
with a health maintenance organization pursuant to the terms of
that contract.
§33-25A-9. Annual report.
(1) Every health maintenance organization shall comply with
and is 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 that
section shall include, but not be limited to, the following:
(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; and (iv) the organization's fidelity bond;
(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 and
human resources or other accredited entity a nationally
recognized accreditation and review organization or as the
commissioner may by rule require;
(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
those 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-10. Information to enrollees.
Every health maintenance organization or its representative
shall annually, before the first day of April, provide to its
enrollees a summary of: Its most recent annual financial
statement, including a balance sheet and statement of receipts
and disbursements; a description of the health maintenance
organization, its basic health care services, its facilities and
personnel, any material changes therein since the last report,
the current evidence of coverage, and a clear and understandable
description of the health maintenance organization's method for
resolving enrollee complaints: Provided, That with respect to
enrollees who have been enrolled through contracts between a
health maintenance organization and an employer, the health maintenance organization shall be deemed to have satisfied the
requirement of this section by providing the requisite summary to
each enrolled employee: Provided, however, That with respect to
medicaid recipients enrolled under a group contract between a
health maintenance organization and the governmental agency
responsible for administering the medicaid program, the health
maintenance organization shall be deemed to have satisfied the
requirement of this section by providing the requisite summary to
each local office of the governmental agency responsible for
administering the medicaid program for inspection by enrollees of
the health maintenance organization.
§33-25A-11. Open enrollment period.
(1) Once a health maintenance organization has been in
operation at least five years, or has enrollment of not less than
fifty thousand persons, the health maintenance organization
shall, in any year following a year in which the health
maintenance organization has achieved an operating surplus,
maintain an open enrollment period of at least thirty days during
which time the health maintenance organization shall, within the
limits of its capacity, accept individuals in the order in which
they apply without regard to preexisting illness, medical conditions or degree of disability except for individuals who are
confined to an institution because of chronic illness or
permanent injury: Provided, That no health maintenance
organization shall be required to continue an open enrollment
period after such time as enrollment pursuant to the open
enrollment period is equal to three percent of the health
maintenance organization's net increase in enrollment during the
previous year.
(2) Where a health maintenance organization demonstrates to
the satisfaction of the commissioner that it has a
disproportionate share of high-risk enrollees and that, by
maintaining open enrollment, it would be required to enroll so
disproportionate a share of high-risk enrollees as to jeopardize
its economic viability, the commissioner may:
(a) Waive the requirement for open enrollment for a period
of not more than three years; or
(b) Authorize the organization to impose such underwriting
restrictions upon open enrollment as are necessary (i) to
preserve its financial stability; (ii) to prevent excessive
adverse selection by prospective enrollees; or (iii) to avoid
unreasonably high or unmarketable charges for enrollee coverage of health services. A health maintenance organization may
receive more than one waiver or authorization.
(3) The enrollment by a health maintenance organization of
medicare beneficiaries who are at least sixty-five years of age
and medicaid beneficiaries shall not exceed fifty percent of its
total enrollee population. The commissioner may permit by
written order and upon application of a health maintenance
organization, the health maintenance organization to exceed the
fifty percent limitation, but in no event may the medicare and
medicaid beneficiaries enrollment exceed seventy-five percent of
its total enrollee population: Provided, That before the
commissioner grants such a waiver, the health maintenance
organization must provide the opinion of a qualified independent
actuary that the higher percentage of medicaid and medicare
recipients will not be detrimental to the solvency of the health
maintenance organization for a period of at least thirty-six
months into the future.
§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. No advertising may be used until it has been approved
by the commissioner. Advertising which has not been disapproved
by the commissioner within sixty days of filing shall be
considered approved. For purposes of this article:
(a) A statement or item of information shall be considered
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 considered
to be misleading, whether or not it may be literally untrue, if,
in the total context in which the statement is made or the item
of information is communicated, the 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 the benefit or advantage or absence
of limitation, exclusion or disadvantage does not in fact exist;
(c) An evidence of coverage shall be considered 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 the 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 rules 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 and the notice shall include the reasons for the
cancellation or nonrenewal: 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: Provided, however, That the enrollee may
not be disenrolled if the disenrollment would constitute
abandonment of a patient. Any enrollee wrongfully disenrolled
shall be reenrolled.
(3)(a) No health maintenance organization may use in its
name, contracts, logo 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; and
(b) No person who has not been issued a certificate of
authority under this article may use the words "health
maintenance organization" or "rural health maintenance
organization" or the initials "HMO" or "RHMO" in its name,
contracts, logo or literature to imply, directly or indirectly,
that it is a health maintenance organization or hold itself out
to be a health maintenance organization.
(4) The providers of a health maintenance organization who
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: Provided,
That a health maintenance organization may petition the
commissioner to exceed an enrollment of three hundred thousand
persons and, upon notice and hearing, good cause being shown and
a determination made that such an increase would be beneficial to
the subscribers, creditors and stockholders of the organization
or would otherwise increase the availability of coverage to
consumers within the state, the commissioner may, by written order only, allow the petitioning organization to exceed an
enrollment of three hundred thousand persons.
(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
the 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 applies 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 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 the 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) With respect to individual and group contracts covering
fewer than twenty-five subscribers, after a subscriber signs an
HMO enrollment application and before the HMO can may process the
application changing or initiating the subscriber coverage, each
HMO must verify in writing, in a form prescribed by the
commissioner, the intent and desire of the individual subscriber
to join the HMO. The verification must shall be in writing and
conducted by someone outside the HMO's marketing department.
Each verification and shall include the following show that:
(a) Confirmation that The subscriber intends and desires to
join the HMO;
(b) If the subscriber is a medicare or medicaid recipient,
confirmation that the subscriber understands that by joining the
HMO he or she 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 he or she 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
that the subscriber understands that he or she is transferring to
another HMO.
(e) (3) 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 his or her 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 he or she has transferred from his or her
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
subscriber's application has been processed and the HMO has
confirmed the subscriber's enrollment by written notice in the
form prescribed by the commissioner. The confirmation notice
shall be accompanied by the evidence of coverage required by
section eight of this article and shall confirm:
(a) The subscriber's transfer from his or her existing
coverage (i.e. from medicare, medicaid, another HMO, etc.) to the new HMO; and
(b) The date enrollment begins and when benefits will be
available.
(4) The enrollment process shall be considered complete
seven days after the HMO mails the confirmation notice and
evidence of coverage to the subscriber. 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) (5) The commissioner may, in his or her discretion,
after notice and hearing, promulgate rules as are necessary to
regulate marketing of health maintenance organizations by persons
compensated directly or indirectly by the health maintenance
organizations. When necessary the rules may prohibit
door-to-door solicitations, may prohibit commission sales, and
may provide for such other proscriptions and other rules as are
required to effectuate the purposes of this article.
§33-25A-17. Examinations.
(1) The commissioner may make an examination of the affairs
of any health maintenance organization and providers with whom
the organization has contracts, agreements or other arrangements as often as he or she considers 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 contract with the department of
health and human resources, or any entity contracted with by the
department of health and human resources which has been
accredited by a nationally recognized accrediting organization
and has been approved by the commissioner to make examinations
concerning the quality of health care services of any health
maintenance organization and providers with whom the organization
has contracts, agreements or other arrangements, or any such
entity contracted with by the department of health and human
resources, as often as it considers 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 examination, the department of health and human resources or
the 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 the examinations and in every way facilitate them. For the purpose of
examinations, the commissioner and the department of health and
human resources have all powers necessary to conduct the
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 principals of the providers concerning their
business.
(4) The health maintenance organization is 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 the examination, the commissioner may accept
the report of an examination made by other states.
(6) The expenses of an examination assessing quality of
health care under subsection (2) of this section and section
seventeen-a shall be reimbursed pursuant to subdivision (i),
subsection (5), section nine, article two of this chapter.
§33-25A-17a. Quality assurance.
(a) Each health maintenance organization shall have in
writing a quality assurance program which describes the program's
objectives, organization and problem solving activities.
(b) The scope of the quality assurance program shall
include, at a minimum:
(1) Organizational arrangements and responsibilities for
quality management and improvement processes;
(2) A documented utilization management program;
(3) Written policies and procedures for credentialing and
recredentialing physicians and other licensed providers who fall
under the scope of authority of the health maintenance
organization;
(4) A written policy that addresses enrollee's rights and
responsibilities;
(5) The adoption of practice guidelines for the use of
preventive health services;
(6) Any other criteria deemed necessary by the commissioner.
(c) As a condition of doing business in this state, each
health maintenance organization shall apply for and submit to an
accreditation examination to be performed by a nationally
recognized accreditation and review organization approved by the
commissioner. The accreditation and review organization must be
experienced in health maintenance organization activities and in
the appraisal of medical practice and quality assurance in a health maintenance organization setting: Provided, That in those
instances where a health maintenance organization has timely
applied for and reasonably pursued an accreditation examination,
but such examination has not been completed, the health
maintenance organization may engage in business in this state
upon submission of proof to the commissioner of its application
for review.
(d) The accreditation and review organization shall issue a
written report of its findings to the health maintenance
organization's governing body. Within thirty days of its
receipt, the health maintenance organization shall submit a copy
of this report to the commissioner.
(e) This section shall become effective on the first day of
May, one thousand nine hundred ninety-eight.
§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 or she 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 the 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 and human resources 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 (l),
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 grievance procedure required by section twelve of
this article in a manner to reasonably resolve valid grievances;
(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;
(j) The health maintenance organization has otherwise failed
to substantially comply with this article; or
(k) The health maintenance organization has violated a
lawful order of the commissioner; or
(l) The health maintenance organization has not, after being given reasonable notice, received or maintained external quality
assurance assessments pursuant to section seventeen-a of this
article deemed satisfactory by 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 the 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, the 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 the 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 or she 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-22. Fees.
Every health maintenance organization subject to this
article shall pay to the commissioner the following fees: For
filing an application for a certificate of authority or amendment
thereto, two hundred dollars; for each renewal of a certificate
of authority, the annual fee as provided in section thirteen,
article three of this chapter; for each form filing and for each
rate filing, the fee as provided in section thirty-four, article
six of this chapter; and for filing each annual report,
twenty-five dollars. Fees charged under this section shall be
for the purposes set forth in section thirteen, article three of
this chapter.
§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 are not applicable to any health
maintenance organization granted a certificate of authority under this article. The provisions of this article 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. The
provisions of this article shall not apply to an entity properly
licensed by a reciprocal state to provide health care services to
employer groups, where fewer than fifty enrollees who are
residents of West Virginia are members of an employer group, and
the employer group contract is entered into in the reciprocal
state. For purposes of this subsection, a "reciprocal state"
means a state which physically borders West Virginia and which
has subscriber or enrollee hold harmless requirements
substantially similar to those set out in section seven-a of 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 in this subsection 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 considered to be practicing medicine
and is 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); section seventeen, article six (noncomplying forms);
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); article thirty-seven (managing
general agents); and article thirty-nine (disclosure of material
transactions) shall be applicable to any health maintenance
organization or rural health maintenance organization granted a
certificate of authority under this article. In circumstances
where the code provisions made applicable to health maintenance
organizations by this section refer to the "insurer," the
"corporation" or words of similar import, the language shall be construed to include health maintenance organizations and rural
health maintenance organizations.
(e) Any long-term care insurance policy delivered or issued
for delivery in this state by a health maintenance organization
or a rural health maintenance organization shall comply with the
provisions of article fifteen-a of this chapter.
NOTE: The purpose of this bill is to amend the Health
Maintenance Organization Act to authorize rural health
maintenance organizations, require annual renewal of certificates
of authority, add procedures for quality assurance and
utilization review and clarify prohibited practices, relationship
to other laws and requirements for certificate of authority and
forms.
Strike-throughs indicate language that would be stricken
from present law, and underscoring indicates new language that
would be added.