Senate Bill No. 594
(By Senators Ball, Sharpe, Helmick, Minear, Wooton,
Anderson, Snyder, Love, Bailey, Ross and Walker)
[Introduced February 18, 1998; referred to the
Committee on Banking and Insurance .]
A BILL to amend chapter thirty-three of the code of West
Virginia, one thousand nine hundred thirty-one, as amended,
by adding thereto a new article, designated article forty- two, relating to provider-sponsored organizations; setting
forth the Legislature's intent to encourage the formation
and operation of provider-sponsored organizations, recognize
the particular operating characteristics of provider- sponsored organizations and establish requirements and
standards for provider-sponsored organizations no more
stringent than those prescribed by the Balanced Budget Act
of 1997 or the secretary of the United States department of
health and human services; defining a provider-sponsored
organization by reference to the Balanced Budget Act of 1997
and definitions established by the secretary of the United
States department of health and human services and by
requiring it to provide a coordinated care plan, which
covers at least basic health care services on a full-risk basis; prescribing what entities may be a provider-sponsored
organization and what entities may be affiliated or
participating providers for a provider-sponsored
organization; excluding a provider-sponsored organization
from other provisions of said chapter thirty-three;
requiring a provider-sponsored organization to obtain and
maintain a certificate of authority except in certain
situations; setting forth requirements for the application
for a certificate of authority, including a feasibility
study and certain financial information; establishing
conditions precedent to obtaining and maintaining a
certificate of authority; providing for the rights of the
state commissioner of insurance in the event of a provider-
sponsored organization's bankruptcy; requiring annual
renewal of a certificate of authority; requiring the
commissioner of insurance to promulgate by rule solvency
standards not more restrictive than those promulgated by the
secretary of the United States department of health and
human services; establishing a fiduciary role for certain
provider-sponsored organization directors, officers or
partners and requiring a blanket fidelity bond; prescribing
provisions for a contract between a provider-sponsored
organization and a participating provider, including that an
enrollee is not liable to the participating provider and that the participating provider must give sixty days' notice
of termination of its contract; prohibiting a health care
provider from collecting money for covered services rendered
to a person known to be a provider-sponsored organization
enrollee; prescribing provisions for a contract between a
provider-sponsored organization and a third-party payor;
prescribing provisions for a contract between a provider-
sponsored organization and an enrollee and for evidence of
coverage; requiring schedules of charges to be approved by
the commissioner of insurance and establishing criteria
therefor; requiring coverage of mammography and pap smears,
rehabilitative services, child immunization services and
emergency services; providing for the use of nurse-midwives;
requiring a mechanism for enrollees to participate in
matters of provider-sponsored organization policy and
operation; requiring a provider-sponsored organization
annually to provide financial and other information to
enrollees; requiring certain provider-sponsored
organizations to hold annual open enrollment; requiring
agents to be licensed; prescribing a procedure for enrolling
individuals and groups with less than twenty-five
subscribers; requiring a subscriber confirmation notice;
prohibiting untrue or misleading advertising, requiring
advertising and a form disclosure statement to be approved by the commissioner of insurance, prohibiting cancellation
or failure to renew an enrollee's coverage except for
certain reasons, limiting enrollment in a provider-sponsored
organization to three hundred thousand, prohibiting
discrimination, prohibiting an enrollee contract from not
being cancelable and holding a person who violates any of
these provisions liable for an amount equal to one year's
subscription plus costs and an attorney's reasonable fee;
requiring an annual report to the commissioner of insurance;
allowing the commissioner of insurance to examine a
provider-sponsored organization and requiring an examination
once every three years; requiring a provider-sponsored
organization to maintain a grievance procedure for its
enrollees and establishing requirements therefor; requiring
a provider-sponsored organization to have in writing a
quality assurance program and establishing requirements
therefor; requiring a provider-sponsored organization's
quality assurance program to be submitted to an
accreditation examination and reported thereon to the
commissioner of insurance; prohibiting coercion,
intimidation or group boycott of a health care provider or
third-party payor and making a violation of the prohibition
a violation of the state antitrust law; limiting the use of
"provider-sponsored organization" and other terms; authorizing the commissioner of insurance to suspend or
revoke a certificate of authority if certain conditions
exist; requiring a provider-sponsored organization to cease
enrollment if its certificate of authority is suspended and
to terminate its affairs if its certificate of authority is
revoked; providing a procedure for denying, suspending or
revoking a certificate of authority and making applicable
the state administrative procedures act; authorize the
commissioner of insurance to levy an administrative penalty
of not less than one hundred dollars nor more than five
thousand dollars, plus a sum equal to damages of enrollees
and the public, in lieu of suspending or revoking a
certificate of authority; making violation of this article
a misdemeanor, subject to a fine of not less than one
thousand dollars nor more than ten thousand dollars or
imprisonment in the county jail for not more than one year,
or both; providing for informal proceedings to resolve
suspected violations; authorizing the commissioner of
insurance to issue a cease and desist order, and the
procedure therefor, or injunctive relief; authorizing an
enrollee or resident of the service area of a provider
sponsored organization to bring an enforcement action and be
awarded costs; providing for rehabilitation, liquidation or
conservation by the commissioner of insurance of a provider sponsored organization that is a separate entity; providing
fees for a certificate of authority; providing for the
application of or exclusion from certain other laws,
including exclusion from municipal business and occupation
taxes and the state antitrust laws; requiring applications,
filings and reports to be public documents; requiring
medical information to be confidential except in certain
circumstances; requiring the commissioner of insurance to
enforce this article; authorizing the commissioner of
insurance to promulgate reasonable rules, not more
restrictive than those promulgated by the secretary of
health and human services pursuant to the Balanced Budget
Act of 1997; authorizing the state department of health and
human resources and the bureau of workers' compensation to
enter into contracts with provider sponsored organizations;
and requiring a report to the Legislature regarding a
guaranty fund.
Be it enacted by the Legislature of West Virginia:
That chapter thirty-three of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, be amended by
adding thereto a new article, designated article forty-two, to
read as follows:
ARTICLE 42. PROVIDER SPONSORED ORGANIZATIONS.
§33-42-1. Legislative findings and intent.
The Legislature finds as follows:
(a)The goals of containing health care costs, improving
the quality of health care and preserving the access of this
state's citizens to health care services will be enhanced by the
expanded use of community-based delivery systems.
(b)The use of community-based delivery systems in this
state will be expanded by the formation and operation of provider
sponsored organizations.
(c)The formation and operation of provider sponsored
organizations in this state has been hindered by restrictions
upon and uncertainty regarding provider sponsored organizations'
ability to contract with welfare benefit plans under ERISA (29
U.S.C. §1001 et seq.) and other payors to provide health care
services on a capitated or other prepaid basis.
(d)The Balanced Budget Act of 1997, Pub. L. 105-33,
established the medicare+choice program, under which an eligible
individual may elect to receive medicare benefits through
enrollment in a health plan offered by a certified provider
sponsored organization.
(e)To be certified under the Balanced Budget Act of 1997,
a provider sponsored organization must be organized and licensed
under state law as a risk-bearing entity eligible to offer health
insurance or health benefits coverage.
(f)The secretary of the United States department of health and human services is required in certain instances to waive for
three years the licensing requirement for a provider sponsored
organization that has filed a waiver application by the first day
of November, two thousand two.
(g)A waiver is required when the state denied a licensing
application based, in whole or in part, on the provider sponsored
organization's failure to meet applicable solvency requirements
and either: (1) The state's requirements are not the same as the
solvency standards established under subsection (a) of section
1856 of the Social Security Act (42 U.S.C. §1395 et seq.), as
amended by the Balanced Budget Act of 1997; or (2) the state
conditioned approval on documentation or information requirements
relating to solvency or other material requirements, procedures
or standards relating to solvency that are different from those
applied by the secretary of the United States department of
health and human services under subsection (d)(2) of section 1855
of the Social Security Act, as amended by the Balanced Budget Act
of 1997, regarding the use of the term "substantial proportion."
(h)A waiver granted to a provider sponsored organization,
as described in subsection (f) of this section, will be
conditioned upon the provider sponsored organization's compliance
with all consumer protection and quality standards insofar as
such standards would apply in this state to the provider
sponsored organization if it were licensed in this state and are consistent with the standards established under part C of the
Social Security Act, as amended by the Balanced Budget Act of
1997: Provided, That state standards relating to benefit
requirements, requirements relating to inclusion or treatment of
providers and coverage determinations (including related appeals
and grievance procedures) shall be superseded by standards
established under subsection (b) of section 1856 of the Social
Security Act, as amended by the Balanced Budget Act of 1997.
(i)It is desirable for this state to license and regulate
the formation and operation of provider sponsored organizations,
rather than having provider sponsored organizations obtain
waivers from the secretary of the United States department of
health and human services and, accordingly, for this state to
adopt solvency requirements that are no more stringent than the
solvency standards established pursuant to the Balanced Budget
Act of 1997 and to include documentation or information
requirements relating to solvency or other material requirements,
procedures or standards relating to solvency that are no more
stringent than those applied by the secretary of the United
States department of health and human services under the Balanced
Budget Act of 1997, regarding the use of the term "substantial
proportion."
(j) It is further desirable for this state to authorize
licensed provider sponsored organizations to offer to all residents of this state, whether directly or through contracts
with health maintenance organizations, governmental agencies,
welfare benefit plans or other third-party payors, coordinated
care plans, covering at least basic health care services on a
full risk and premium, capitated or other prepaid basis.
(k) The citizens of this state offered and enrolled in
coordinated care plans with provider sponsored organizations,
whether directly or through contracts with third-party payors,
must be adequately protected against the insolvency of provider
sponsored organizations, must be assured that provider sponsored
organizations are accountable for meeting appropriate standards
for market conduct, fair complaint and appeal processes,
credentialing, quality assurance, utilization management, access
and reporting, and must be assured of their continued receipt of
health care services.
(l) The requirements and standards for provider sponsored
organizations established by this article or by the commissioner
pursuant to this article: (1) Shall take into account the
particular operating characteristics of provider sponsored
organizations, including that they or their affiliated providers
are responsible for the delivery and quality of health care
services in addition to the cost thereof; that, unlike insurers
or health maintenance organizations, they are predominantly
health care delivery organizations, and they or their affiliated providers take in revenues in many forms, the majority of which
do not involve full risk; and that their primary assets are, not
revenue streams of premiums and investments, but the health care
delivery system itself; and (2) shall be no more stringent than
the requirements and standards prescribed for provider sponsored
organizations by the Balanced Budget Act of 1997 or by the
secretary of the United States department of health and human
services pursuant thereto.
(m) The formation, operation and regulation of provider
sponsored organizations pursuant to this article will expand the
use of efficient community-based health care systems emphasizing
quality care while adequately protecting the citizens of this
state.
(n) In carrying out this intention, it is the policy of this
state to eliminate legal barriers to the formation and operation
of provider sponsored organizations accountable to consumers for
the health care services they provide; to provide for the
financial and administrative soundness of provider sponsored
organizations as it relates to their ability to provide health
care services and to exempt provider sponsored organizations from
regulation as insurers, health maintenance organizations or
intermediaries and from the operation of insurance and health
maintenance organization laws and rules of this state and all
other laws and rules inconsistent with the purposes of this article.
§33-42-2. Definitions.
(a) "Affiliation" or "affiliated" means that, through
contract, ownership or otherwise:
(1) One health care provider, directly or indirectly,
controls, is controlled by or is under common control with the
other;
(2) Both health care providers are part of a controlled
group of corporations under section 1563 of the Internal Revenue
Code of 1986;
(3) Each health care provider is a participant in a lawful
combination under which each health care provider shares
substantial risk in connection with the provider sponsored
organization's operations; or
(4) Both health care providers are part of an affiliated
service group under section 414 of the Internal Revenue Code of
1986.
For purposes of this subsection, control is presumed to
exist if one party, directly or indirectly, owns, controls or
holds the power to vote, or provides for, not less than fifty-one
percent of the voting rights or governance rights of another.
(b) "Basic health care services" means physician, hospital,
out-of-area, podiatric, chiropractic, laboratory, X ray and
emergency services, 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, which services need not
necessarily include all procedures or services offered by a
health care provider. "Basic health care services" does not
include experimental procedures.
(c)"Beneficiary" means an individual whose health care
benefits are provided by and through a third-party payor that has
contracted with a provider sponsored organization for a
coordinated care plan.
(d)"Capitation" means a fixed amount paid in advance: (1)
By a third-party payor to a provider sponsored organization under
contract with the third-party payor in exchange for which the
provider sponsored organization agrees to provide all necessary
contracted health care services; or (2) by a provider sponsored
organization to a participating provider in exchange for which
the participating provider agrees to provide all necessary
contracted health care services.
(e)"Consumer" means any person who is not a health care
provider or an employee, officer, director, stockholder or other
owner of a health care provider.
(f)"Commissioner" means the state commissioner of
insurance.
(g)"Coordinated care plan" means a comprehensive health
care plan, providing at least basic health care services on a
full risk and premium, capitated or other prepaid basis, offered
by a provider sponsored organization and includes a
medicare+choice plan. A coordinated care plan may cover health
care services in addition to basic health care services.
(h)"Copayment" means a specific dollar amount, except as
otherwise provided for by statute, that the enrollee must pay
upon receipt of covered health care services and which is set at
an amount consistent with allowing enrollee access to health care
services.
(i)"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.
(j) "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.
(k) "Enrollee" means a beneficiary, a subscriber or an
individual who is enrolled in a coordinated care plan because of his or her relationship to the beneficiary or subscriber.
(l) "Enrollee contract" means the contract between the
provider sponsored organization and the subscriber, pursuant to
which the provider sponsored organization agrees to provide
coordinated care plans to covered enrollees.
(m) "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.
(n) "Fee-for-service" means reimbursement of hospitals,
physicians and other health care providers at a rate determined
or agreed to by the payor on a per-service basis, including rates
discounted from the health care provider's charges, which does
not place the health care provider at financial risk.
(o) "Full risk" means an arrangement under which the
provider sponsored organization assumes full financial risk on a
prospective basis for the provision of health care services
offered by the provider sponsored organization: Provided, That
the provider sponsored organization:
(1)May obtain insurance or make other arrangements for the
cost of providing to any enrollee such services the aggregate
value of which exceeds such aggregate level as the commissioner
specifies by rule from time to time, which level shall not exceed
that specified by the secretary of the United States department
of health and human services pursuant to subsection (b)(1) of section 1855 of the Social Security Act, as amended by the
Balanced Budget Act of 1997;
(2)May obtain insurance or make other arrangements for the
cost of such health care services provided to its enrollees other
than through the provider sponsored organization because medical
necessity required their provision before they could be secured
through the provider sponsored organization;
(3)May obtain insurance or make other arrangements for not
more than ninety percent of the amount by which its costs for any
of its fiscal years exceeds one hundred fifteen percent of its
income for such fiscal year;
(4)May make arrangements with physicians or other health
care professionals, health care institutions or other combination
of such individuals or institutions to assume all or part of the
financial risk on a prospective basis for the provision of basic
health care services by the physicians or other health
professionals or through the institutions; and
(5)May make other arrangements allowed by the secretary of
the United States department of health and human services for
medicare+choice organizations or acceptable to the commissioner.
(p) "Governmental agency" means the state department of
health and human resources, including the state medicaid program,
the public employees insurance agency, the bureau of workers'
compensation or any other state program or agency responsible for paying for or otherwise providing health care services or the
federal medicare program or any other federal program or agency
responsible for paying for or otherwise providing health care
services.
(q) "Health care professional" means an allopathic or
osteopathic physician or other health care professional if
coverage for the health care professional's services is provided
by the coordinated care plan or the third-party contract. Such
term includes a podiatrist, optometrist, chiropractor,
psychologist, dentist, physician assistant, physical or
occupational therapist and therapy assistant, speech-language
pathologist, audiologist, registered or licensed practical nurse
(including nurse practitioner, clinical nurse specialist,
certified registered nurse anesthetist and certified nurse- midwife), licensed certified social worker, registered
respiratory therapist and certified respiratory therapist
technician.
(r) "Health care provider" means any individual who or
entity that is engaged in the delivery of health care services in
this state and is required by state law or regulation to be
licensed, certified or otherwise authorized by this state to
engage in the delivery of health care services in this state.
(s) "Health care services" means any services or goods
offered by a health care provider and included in the furnishing to any individual of medical, behavioral health or dental care,
hospitalization, osteopathic, chiropractic or podiatric services,
nursing, long-term care, home health, emergency care, 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.
(t) "Health maintenance organization" means an entity
licensed pursuant to article twenty-five-a of this chapter.
(u) "Impaired" means a financial situation in which, based
upon the financial information which would be required by this
article for the preparation of the provider sponsored
organization's annual statement, the provider sponsored
organization does not meet the solvency standards established
pursuant to section eight of this article.
(v) "Insolvent" or "insolvency" means a financial situation
in which, based upon the financial information that would be
required by this article for the preparation of the provider
sponsored organization's annual statement, the assets of the
provider sponsored organization are less than the sum of all of
its liabilities and required reserves.
(w) "Insurer" means an entity other than a health
maintenance organization or provider sponsored organization,
required to be licensed pursuant to this chapter.
(x) "Intermediary" means an entity regulated by the
commissioner pursuant to subsection (3), section three, article
twenty-five-a of this chapter.
(y) "Medicare+choice organization" means a public or private
entity that is certified under section 1856 of the Social
Security Act, as amended by the Balanced Budget Act of 1997, as
meeting the requirements and standards of part C for a
medicare+choice organization.
(z) "Medicare+choice plan" means health benefits coverage
offered under a policy, contract or plan by a medicare+choice
organization pursuant to and in accordance with a contract under
section 1857 of the Social Security Act, as amended by the
Balanced Budget Act of 1997.
(aa) "Participating provider" means a health care provider
or an organization owned, controlled or affiliated with one or
more health care providers, including, without being limited to,
a professional corporation, partnership or other similar
organization, who or which has contracted with a provider
sponsored organization to provide specified health care services.
(bb) "Payor" means an individual or group of individuals
that pay for health plan coverage for one or more enrollees and
includes a third-party payor.
(cc) "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 provider sponsored organization for enrollment in its
coordinated care plan.
(dd) "Prepayment" or "prepaid" means a risk payment
mechanism through contract: (1) Between a payor and a provider
sponsored organization, which may include, but is not limited to,
full capitation and percent of premium; and (2) between a
provider sponsored organization and a participating provider,
which may include, but is not limited to, full capitation,
partial capitation, percent of premium, budget targets and risk
corridor arrangements.
(ee) "Provider contract" means the contract between the
provider sponsored organization and a participating provider,
pursuant to which the participating provider agrees to provide
specified health care services to enrollees of the provider
sponsored organization.
(ff) "Provider sponsored organization" means a public or
private entity that:
(1)Is established or organized and operated by a health
care provider or group of affiliated health care providers;
(2)Provides a substantial proportion of the health care
services offered directly through the health care provider or
affiliated group of health care providers; and
(3)With respect to which the affiliated health care providers, share, directly or indirectly, substantial risk with
respect to the provision of such health care services and have at
least a majority financial interest in the entity: Provided,
That, in determining "majority financial interest," the
commissioner shall take into account that the provider sponsored
organization may be a nonprofit corporation and that public or
governmental health care providers may be affiliated providers of
the provider sponsored organization.
The term "provider sponsored organization" does not include
a health care provider that contracts, including on a prepaid
basis, to provide health care services it can provide directly or
a health care provider or group of affiliated health care
providers that contract to provide health care services on a
fee-for-service or other nonprepaid basis.
(gg) "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 entities
similar to provider sponsored organizations and who has no
financial or employment interest in the provider sponsored
organization.
(hh) "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.
(ii) "Service area" means the county or counties approved by
the commissioner within which the provider sponsored organization
may provide or arrange for health care services to be available
to its enrollees.
(jj) "Subscriber" means an individual who is responsible for
paying premiums to a provider sponsored organization for
enrollment in a coordinated care plan or an enrollee whose
employment or other status is the basis of his or her eligibility
for enrollment in a coordinated care plan.
(kk) "Substantial proportion" means "substantial proportion"
as defined by the commissioner by rule, which rule:
(1)Shall take into account the need for a provider
sponsored organization to assume responsibility for providing:
(i) Significantly more than the majority of the health care
services offered through its own affiliated health care
providers; and (ii) most of the remainder of the health care
services offered through nonaffiliated participating providers,
in order to assure financial stability and to address the
practical considerations involved in integrating the delivery of
a wide range of health care providers;
(2)Shall take into account the need for a provider
sponsored organization to provide a limited proportion of the health care services offered through health care providers that
are neither affiliated with nor participating providers for the
provider sponsored organization;
(3)May allow for variation in the definition of
substantial proportion among provider sponsored organizations
based on relevant differences among the provider sponsored
organizations, such as their location in an urban or rural area;
and
(4)May not require a greater percentage or otherwise be
more stringent than the definition established by the secretary
of the United States department of health and human services
pursuant to subsection (d)(2) of section 1855 of the Social
Security Act, as amended by the Balanced Budget Act of 1997.
(ll) "Surplus" means the amount by which the provider
sponsored organization's assets exceeds its liabilities and
required reserves, based upon the financial information which
would be required by this article for the preparation of the
provider sponsored organization's annual statement, except that
assets pledged to secure debts not reflected on the books of the
provider sponsored organization shall not be included in surplus.
(mm) "Third-party contract" means a contract between a
third-party payor and a provider sponsored organization, pursuant
to which a coordinated care plan is required to be provided by
the provider sponsored organization to beneficiaries of the third-party payor. References in this article to group contracts
or group certificates include third-party contracts and evidences
of coverages for third-party contracts.
(nn) "Third-party payor" means any entity responsible for
providing payment for health care services for an individual,
including, but not limited to, a health maintenance organization,
a governmental agency or a welfare benefit plan.
(oo) "Utilization management" means a system for the
evaluation of the necessity, appropriateness and efficiency of
the use of health care services, procedures and facilities.
(pp) "Welfare benefit plan" means a welfare benefit plan
established pursuant to ERISA (Title 29 United States Code, §1001
et seq.), insofar as the plan provides health benefits and is
funded in a manner other than through the purchase of a contract
of insurance or a health maintenance organization benefit plan.
§33-42-3. Organization; affiliated and participating providers;
not an insurer.
(a)A provider sponsored organization shall be domiciled in
this state and may be organized as a corporation under article
one, chapter thirty-one of this code, as a limited liability
company under article one-a, chapter thirty-one of this code, or
in any other form that constitutes a legal entity under the laws
of this state, and shall have such powers as are available under
the applicable authorizing law. If a provision of this article conflicts with the entity's authorizing law, the provision of
this article shall apply.
(b)The state or federal government, a political
subdivision of the state or federal government or any agency
thereof may be affiliated with or a participating provider for a
provider sponsored organization. Health care providers located
outside this state may be affiliated with or participating
providers for a provider sponsored organization. A provider
sponsored organization for the purposes of this article is not
required to be a medicare+choice organization.
(c)A provider sponsored organization that obtains and
maintains a certificate of authority pursuant to this article
shall not be considered an insurer, health maintenance
organization, intermediary, prepaid limited health service
organization, hospital, medical, dental or health service
corporation or health care corporation and shall not be subject
to any provisions of chapter thirty-three of this code except
this article forty-two and as specifically set forth herein.
§33-42-4. Certificate of authority required.
(a)No person may establish or operate a provider
sponsored network in this state without first obtaining and
maintaining a certificate of authority under this article. No
person may sell a coordinated care plan enrollee contract or
enter into an effective third-party contract prior to the provider sponsored organization's receipt of a certificate of
authority under this article. Any person may, however, establish
the feasibility of a provider sponsored organization prior to
receipt of a certificate of authority through negotiations and
preliminary agreements with third-party payors, funding drives
and application for and receipt of loans and grants.
(b)Anything to the contrary in this code notwithstanding,
a network of health care providers that contracts with an
insurer, a health maintenance organization or a provider
sponsored organization to provide health care services is not
required to obtain a certificate of authority as a health
maintenance organization or a provider sponsored organization or
to comply with any rules issued by the commissioner regarding
intermediaries, regardless of the method of reimbursement to the
network or its members, if:
(1) The insurer, health maintenance organization or provider
sponsored organization maintains the ultimate responsibility to
perform all services required by the contract between the
insurer, health maintenance organization or provider sponsored
organization and the subscriber, employer or governmental agency,
as the case may be, or by the contract between an employer and an
employee, and by the laws of this state;
(2)The insurer, health maintenance organization or
provider sponsored organization maintains the ultimate responsibility to pay for any covered services properly obtained
by a covered individual from a health care provider that is not
a member of the network; and
(3)The network of health care providers and its members
are prohibited from seeking reimbursement, other than copayments
and any deductibles, for any covered service from a covered
individual.
(c)Nothing in this article may be construed to require any
health care provider, network of health care providers or
provider sponsored organization that contracts with a welfare
benefit plan, regardless of the method of reimbursement, to
obtain a certificate of authority as a health maintenance
organization or a provider sponsored organization or to comply
with any rules issued by the commissioner regarding
intermediaries.
(d)A provider sponsored organization or network of health
care providers may not be required to obtain a certificate of
authority pursuant to this article if it contracts with a health
maintenance organization in compliance with rules issued by the
commissioner pursuant to article twenty-five-a of this chapter
regarding intermediaries.
§33-42-5. Application for certificate of authority.
(a)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 provider
sponsored organization in compliance with this article.
(b)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:
(1)The basic organizational document;
(2)The bylaws or rules;
(3)A list of the affiliated providers;
(4)A list of names, addresses and official positions of
each member of the governing body, which shall contain a full
disclosure of the application of any financial interest by the
officer or member of the governing body or any health care
provider or any organization or corporation owned or controlled
by that person and the provider sponsored organization and the
extent and nature of any contract or financial arrangement
between that person and the provider sponsored organization;
(5)A description of the provider sponsored organization;
(6)A list of the participating providers;
(7)A description of the coordinated care plan or plans to
be offered;
(8)A description of the risk arrangement or arrangements
to be entered by the provider sponsored organization;
(9)A copy of each evidence of coverage form, enrollee
contract form and third-party contract form;
(10)A copy of each form provider contract;
(11)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;
(12)A schedule of proposed premiums for any coordinated
care plan;
(13)A financial plan, which includes a three-year
projection of the expenses and income and other sources of future
capital;
(14)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 provider
sponsored organization. The study shall be for the greater of
three years or until the provider sponsored organization has been
projected to be profitable for twelve consecutive months. The
study must show that the provider sponsored organization would,
at the end of each month of the projection period, meet the
solvency requirements established pursuant to section eight of
this article. The qualified independent actuary shall certify that the provider sponsored organization is actuarially sound:
Provided, That the certification shall consider the premiums; the
prepayment rates and risk arrangements, both in the third-party
contracts and the provider contracts; the period of time for
which the premiums, prepayment rates and risk arrangements apply;
the health care services to be provided and the proportion
thereof to be provided by the affiliated health care providers,
the proportion thereof to be provided by nonaffiliated but
participating providers and the proportion thereof that may be
provided by health care providers that are neither affiliated
with nor participating providers for the provider sponsored
organization; to the extent required by the risk arrangement,
whether incurred but not reported claims and claims reported but
not fully paid have been adequately provided for; other expenses
to be incurred by the provider sponsored organization; and any
other funds available for the payment of obligations of the
provider sponsored organization. With respect to premiums for any
coordinated care plan, the qualified independent actuary shall
further certify that the premium rates are neither inadequate nor
excessive or unfairly discriminatory; the rates are appropriate
for the classes of risks for which they have been computed; and
the rating methodology is appropriate: Provided, That the
certification shall include an adequate description of the rating
methodology, showing the methodology follows consistent and equitable actuarial principles;
(15)A statement reasonably describing the service area or
areas to be served and the type or types of enrollees to be
served;
(16)A description of the complaint procedures to be
utilized as required under section twenty-one of this article;
(17)A description of the mechanism by which enrollees will
be afforded an opportunity to participate in matters of policy
and operation of the coordinated care plan under section fourteen
of this article;
(18)A complete biographical statement on forms prescribed
by the commissioner and an independent investigation report of
all of the individuals referred to in subdivision (4) of this
subsection and all officers, directors and persons holding five
percent or more of the common stock or other equity of the
provider sponsored organization;
(19)A description of the proposed method of marketing the
coordinated care plan;
(20)A description of the provider sponsored organization's
quality assurance program; and
(21)Such other information as the commissioner may
reasonably require to be provided.
(c)A provider sponsored 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 by rule reasonably require. If the commissioner does not
disapprove of the filing within sixty days of filing, it shall be
considered approved and may be implemented by the provider
sponsored organization.
§33-42-6. Conditions precedent to obtaining or maintaining a
certificate of authority; renewal of certificate of
authority.
(a)As a condition precedent to obtaining or maintaining a
certificate of authority, a provider sponsored organization shall
file or have on file with the commissioner:
(1)A completed application as described in section five of
this article;
(2)(i) If the provider sponsored organization is a
separate entity, organized and operated by its affiliated
providers solely for the purpose of offering coordinated care
plans, and provides health care services only through provider
contracts, a waiver of any right to file or be subject to a
bankruptcy proceeding and 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 the provider sponsored organization; or
(ii) If the provider sponsored organization is not a
separate entity as described in paragraph (i) of this subdivision
(2), a waiver of any right to contest the commissioner's
involvement, whether as a creditor or otherwise, in any
proceeding for the liquidation, rehabilitation, reorganization or
conservation of the provider sponsored organization;
(3)Within thirty days of any change in the membership of
the affiliated providers or the governing body of the
organization or in the officers or persons holding five percent
or more of the common stock or other equity of the provider
sponsored organization, or as otherwise reasonably required by
the commissioner:
(i) An amended list of the names, addresses and official
positions of each member of the affiliated providers or the
governing body, as the case may be, and a full disclosure of any
financial interest by a member of the governing body or any
health care provider or any organization or corporation owned or
controlled by that person and the provider sponsored organization
and the extent and nature of any contract or financial
arrangements between that person and the provider sponsored
organization; and
(ii) A complete biographical statement on forms prescribed
by the commissioner and an independent investigation report on each person for whom a biographical statement and independent
investigation report have not previously been submitted;
(4) For provider sponsored organizations that have been in
existence at least three years, a copy of the current quality
assurance report submitted to the provider sponsored 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 provider sponsored
organization, a determination by the commissioner as to the
feasibility of the provider sponsored organization's proposed
quality assurance program: Provided, That if a provider
sponsored organization files proof found in the commissioner's
discretion to be sufficient to demonstrate that the provider
sponsored organization has timely applied for and reasonably
pursued a review of its quality assurance program, but a quality
report has not been issued by the accreditation and review
organization, the provider sponsored organization shall be deemed
to have complied with this subdivision.
(b)All certificates of authority issued to provider
sponsored organizations expire at midnight on the thirtieth day
of November of each year. The commissioner shall renew annually
the certificates of authority of all provider sponsored
organizations that continue to meet all requirements of this
section and subsection (b), section seven of this article, make application therefor upon a form prescribed by the commissioner
and pay the renewal fee prescribed: Provided, That a provider
sponsored organization does not qualify for renewal of its
certificate of authority if the provider sponsored organization
has no enrollees in this state within twelve months after
issuance of the certificate of authority: Provided, however,
That a provider sponsored organization not qualifying for renewal
may apply for a new certificate of authority under section five
of this article.
§33-42-7. Issuance of certificate of authority.
(a)Upon receipt of an application for a certificate of
authority, the commissioner shall determine whether the
application for a certificate of authority has demonstrated:
(1)The willingness and potential ability of the provider
sponsored organization to assure that basic health care services
will be provided in a manner to enhance and assure both the
availability and accessibility of adequate personnel and
facilities;
(2)Arrangements for an ongoing evaluation of the quality
of health care provided by the provider sponsored organization
and utilization review which meet those standards as the
commissioner may by rule reasonably require. Prior to the
adoption of rules relating specifically to provider sponsored
organizations, provider sponsored organizations shall meet those applicable standards established by the commissioner for health
maintenance organizations; and
(3)That the provider sponsored 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 the
commissioner may by rule reasonably require.
(b)The commissioner shall issue or deny a certificate of
authority to any person filing an application within ninety 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:
(1)The provider sponsored organization's proposed plan of
operation meets the requirements of subsection (a) of this
section;
(2)The provider sponsored 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 provider sponsored organization from the obligation 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 permits a provider sponsored
organization to charge copayments to medicare beneficiaries or
medicaid recipients in excess of the copayments permitted under
those programs, nor may a provider sponsored organization be
required to provide services to the medicare beneficiaries or
medicaid recipients in excess of the benefits compensated under
those programs;
(3) The provider sponsored organization meets the financial
solvency requirements set forth in section eight of this article;
(4) The provider sponsored organization has made
arrangements that will guarantee the continuation of covered
health care services and, except as otherwise provided by the
provider contract, payments to health care providers for covered
health care services rendered both prior to and after insolvency
for the duration of the contract period for which payment to the
provider sponsored organization has been made, except that
covered health care services to enrollees who are confined on the
date of insolvency in an inpatient facility shall be continued
until their discharge;
(5) The form of the provider contract complies with section
eleven of this article; the form of the third-party contract
complies with section twelve of this article; and the form of any
enrollee contract and certificate of coverage complies with section thirteen of this article;
(6)Reasonable provisions have been made for emergency and
out-of-area health care services;
(7)The enrollees will be afforded an opportunity to
participate in matters of policy and operation pursuant to
section fourteen of this article;
(8)The provider sponsored organization will assume full
risk on a prospective basis for the provision of basic health
care services, including hospital care;
(9)The ownership, control and management of the provider
sponsored organization is competent and trustworthy and possesses
managerial experience that would make the proposed provider
sponsored organization operation beneficial to the enrollees.
The commissioner may, at his or her discretion, refuse to grant
or continue authority to transact the business of a provider
sponsored 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; and
(10) The provider sponsored 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 twenty-two of this article and any rules
reasonably adopted by the commissioner; and is deemed
satisfactory by the commissioner. If the commissioner determines
that the quality assurance program of a provider sponsored
organization is deficient in any significant area, the
commissioner, in addition to other remedies provided in this
chapter, may establish a corrective action plan that the provider
sponsored organization must follow as a condition to the issuance
of a certificate of authority: Provided, That in those instances
where a provider sponsored organization has timely applied for
and reasonably pursued a review of its quality assurance program,
but the review has not been completed, the provider sponsored
organization shall submit proof to the commissioner of its
application for that review. Prior to the adoption of rules
relating specifically to provider sponsored organizations,
provider sponsored organizations shall meet those applicable
standards established by the commissioner for health maintenance
organizations.
§33-42-8. Solvency standards.
The provider sponsored organization shall meet solvency
standards to be established by the commissioner by rule, which
rule shall be promulgated by the commissioner as an emergency
rule pursuant to the provisions of section fifteen, article three, chapter twenty-nine-a of this code, within the later of
ninety days of adoption of this article or sixty days of
promulgation by the secretary of the United States department of
health and human services of standards pursuant to section 1856
of the Social Security Act, as amended by the Balanced Budget Act
of 1997. The rule shall:
(a)Be promulgated only after consultation with health care
providers and other interested parties;
(b)Take into account: (1) The delivery system assets of
the provider sponsored organization and the ability of the
provider sponsored organization to provide services directly to
enrollees through affiliated providers; (2) alternative means of
protecting against insolvency, including reinsurance,
unrestricted surplus, letters of credit, guaranties,
organizational insurance coverage, partnerships with other
licensed entities and valuation attributable to the ability of
the provider sponsored organization to meet its service
obligations through direct delivery of care; and (3) any
standards developed by the national association of insurance
commissioners specifically for risk-based health care delivery
organizations;
(c)Include provisions to prevent enrollees from being held
liable to any person or entity for the provider sponsored
organization's debts in the event of the provider sponsored organization's insolvency; and
(d)Not be more restrictive than the standards promulgated
by the secretary of the United States department of health and
human services pursuant to section 1856 of the Social Security
Act, as amended by the Balanced Budget Act of 1997.
§33-42-9. Powers of provider sponsored organization.
Upon obtaining a certificate of authority as required under
this article, a provider sponsored organization may offer
coordinated care plans, enter into third-party contracts and
engage in any activities, consistent with the purposes and
provisions of this article, which are necessary to the
performance of its obligations under such plans or contracts,
subject to the limitations provided for in this article. The
governing body of a provider sponsored organization may include
enrollees and participating providers.
§33-42-10. Fiduciary responsibilities of officers; fidelity
bond.
(a) Any director, officer or partner of a provider sponsored
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 provider sponsored 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 provider
sponsored organization, issued by an insurer licensed in this
state or, if the fidelity bond required by this subsection 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.
§33-42-11. Provider contracts.
(a) Whenever a contract exists between a provider sponsored
organization and a participating provider and the provider
sponsored organization fails to meet its obligations to pay fees
for services already rendered to an enrollee, the provider
sponsored organization is liable for the fee or fees rather than
the enrollee: Provided, That the liability as between the
provider sponsored organization and the participating provider
shall be governed by the provider contract.
(b) No enrollee of a provider sponsored organization is
liable to any provider of health care services for any services
covered by the provider sponsored organization if at any time
during the provision of the services, the health care provider,
or its agent, is aware that the individual receiving the services is a provider sponsored organization enrollee.
(c) If at any time during the provision of the services, a
health care provider, or its agent, is aware that the individual
receiving the services is a provider sponsored organization
enrollee, that health care provider or any representative of the
health care provider may not collect or attempt to collect from
a provider sponsored organization enrollee any money for services
covered by the coordinated care plan, and no health care provider
or representative of a health care provider may maintain any
action at law against an enrollee of a provider sponsored
organization to collect money owed to the health care provider
for services covered by the coordinated care plan.
(d) Every contract between a provider sponsored organization
and a participating provider shall be in writing and shall
contain a statement to the effect of subsection (a) of this
section and the following provisions:
(1) That the enrollee is not liable to the health care
provider for any services covered by the enrollee contract or
third-party contract, as applicable;
(2) That the health care provider shall provide sixty days
advance written notice to the provider sponsored organization and
the commissioner before canceling the provider contract for any
reason; and
(3) That nonpayment for goods or services rendered by the health care provider to the provider sponsored organization is
not a valid reason for avoiding the sixty-day advance notice of
cancellation.
(e) Upon receipt by the provider sponsored organization of
a sixty-day cancellation notice, the provider sponsored
organization may, if requested by the health care provider,
terminate the contract in less than sixty days if the provider
sponsored organization is not financially impaired or insolvent.
(f) 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 provider sponsored
organization.
(g) When an enrollee in a coordinated care plan receives
covered emergency health care services from a nonparticipating
provider, the provider-sponsored organization is responsible
for payment of the health care provider's normal charges for
those covered services, exclusive of any applicable deductibles
or copayments.
§33-42-12. Third-party payor contracts.
In addition to contracts to provide coordinated care plans
directly, a provider sponsored organization may enter into
contracts with third-party payors in accordance with this
section. A contract between a provider sponsored organization
and a third-party payor may provide for the provider sponsored organization to provide one or more designated health care
services in addition to basic health care services as a part of
the coordinated care plan. The following shall be met:
(a) The contract shall be in writing.
(b) The contract shall provide:
(1) If the third-party payor fails to pay for health care
services as set forth in the contract, the beneficiary is not
liable to the provider sponsored organization or the
participating providers for any sums owed by the third-party
payor; and
(2) A participating provider, agent, trustee or assignee
thereof may not maintain any action at law against a beneficiary
to collect sums owed by the third-party payor.
(c) A third-party contract shall be filed by the provider
sponsored organization with the commissioner. Within thirty days
of the date the contract was filed, the commissioner shall review
the contract to determine if it complies with the provisions of
this section. If the contract does not so comply, the
commissioner shall disapprove the contract and shall notify the
provider sponsored organization of disapproval in writing not
later than the forty-fifth day after the date the contract
was filed. If such disapproval has not been received by the
forty-fifth day, the third-party contract shall take effect. The
commissioner shall promulgate procedural rules pursuant to chapter twenty-nine-a of this code to implement this section
within ninety days of the adoption of this article.
§33-42-13. Enrollee contracts and evidence of coverage for
coordinated care plans; premiums for coordinated care
plans.
(a) (1) Every enrollee in a coordinated care plan is
entitled to evidence of coverage in accordance with this section.
The provider sponsored organization or its designated
representative shall issue the evidence of coverage.
(2)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.
(3)An evidence of coverage shall contain a clear, concise
and complete statement of:
(i)The health care services and 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;
(v)A description of the provider sponsored organization's
method of 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
provider sponsored organization or its designee."
(4)Any subsequent approved change in an evidence of
coverage shall be issued to each enrollee.
(5)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 (2), subsection
(a) of this section, unless the commissioner promulgates a rule
dispensing with this requirement.
(b) Premiums for coordinated care plans are subject to
approval in accordance with this section. The premiums may be
established in accordance with actuarial principles: Provided,
That premiums may 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; 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 provider sponsored
organization has: (1) Made a vigorous, good faith effort to
control rates paid to health care providers; (2) established a
premium schedule, including copayments, if any, which encourages
enrollees to seek out preventive health care services; (3) made
a good faith effort to secure arrangements whereby basic health
care services can be obtained by enrollees from local health care
providers to the extent that the health care providers offer the
services; and (4) made a good faith effort to support community
health assessments and efforts directed at community health
needs.
(c)Rates for coordinated care plans are inadequate if the
premiums derived from the rating structure, plus investment
income, copayments, 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 provider sponsored
organization is projected to make a profit. For this analysis,
investment income shall not exceed three percent of total
projected revenues.
(d)The commissioner shall within a reasonable period
approve any form if the requirements of subsection (a) of this
section are met and any schedule of charges if the requirements
of subsection (b) of this section are met. It is unlawful to
issue the form or to use the schedule of charges for a
coordinated care plan 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 shall 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.
(e)The commissioner may require the submission of whatever
relevant information in addition to the schedule of premiums
which he or she consider necessary in determining whether to
approve or disapprove a filing made pursuant to this section.
(f)An individual enrollee may cancel a contract with a
provider sponsored organization at any time for any reason:
Provided, That a provider sponsored organization may require that
the enrollee give 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 provider sponsored organization pursuant to the terms of
the group contract.
§33-42-14. Requirements of coordinated care plan.
(a)Any coordinated care plan offered by a provider
sponsored organization shall include coverage for mammography
and pap smear testing as required by section eight-a, article
twenty-five-a of this chapter; rehabilitation services as
required by section eight-b of said article twenty-five-a; child
immunization services as required by section eight-c of said
article twenty-five-a; and emergency services as required by
section eight-d of said article twenty-five-a.
(b)A coordinated care plan shall allow a certified
nurse-midwife to be chosen as or designated in lieu of an
enrollee's primary care physician during the enrollee'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, That nothing in this subsection expands the scope of
practice for certified nurse-midwives as defined in article
fifteen, chapter thirty of this code.
(c)The provider sponsored organization shall establish a
mechanism to afford the enrollees an opportunity to participate
in matters of policy and operation through the establishment of
advisory panels, by the use of advisory referenda on major policy
decisions or through the use of other mechanisms as the
commissioner may reasonably prescribe by rule.
§33-42-15. Information to subscribers.
Every provider sponsored organization or its representative
shall annually, before the first day of October, provide to its
subscribers a summary of its most recent annual financial
statement, including a balance sheet and statement of receipts
and disbursements; a description of the provider sponsored
organization, its basic health care services, its facilities and
personnel and any material changes therein since the last report;
the current evidence of coverage; and a clear and understandable
description of the provider sponsored organization's method for
resolving enrollee complaints: Provided, That with respect to
medicaid beneficiaries enrolled under a third-party contract
between a provider sponsored organization and the governmental agency responsible for administering the medicaid program, the
provider sponsored 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 provider sponsored organization.
§33-42-16. Open enrollment period for coordinated care plans.
(a)Once a provider sponsored organization has offered a
coordinated care plan for at least five years, or has enrollment
in its coordinated care plans of not less than fifty thousand
persons, the provider sponsored organization shall, in any year
following a year in which the provider sponsored organization has
achieved an operating surplus, maintain an open enrollment period
of at least thirty days during which time the provider sponsored
organization shall, within the limits of its capacity, accept
individuals into its coordinated care plan 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 provider sponsored
organization may 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 provider
sponsored organization's net increase in enrollment during the previous year: Provided, however, That this section does not
apply to open enrollment for beneficiaries of governmental
agencies, which shall be governed by the rules or policies of the
respective governmental agencies.
(b)Where a provider sponsored 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:
(1)Waive the requirements for open enrollment for a period
of not more than three years; or
(2)Authorize the provider sponsored 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 provider sponsored
organization may receive more than one waiver or authorization.
§33-42-17. Agent licensing and appointment required; regulation
of marketing.
(a) Provider sponsored organizations are subject to the
provisions of article twelve of this chapter with respect to
their coordinated care plans.
(b)With respect to individual and group contracts for
coordinated care plans covering fewer than twenty-five
subscribers, after a subscriber signs a provider sponsored
organization enrollment application and before the provider
sponsored organization may process the application changing or
initiating the enrollee coverage, each provider sponsored
organization shall verify in writing, in a form prescribed by the
commissioner, the intent and desire of the individual subscriber
to join the provider sponsored organization. The verification
shall be conducted by someone outside the provider sponsored
organization marketing department and shall show that:
(1)The subscriber intends and desires to join the
coordinated care plan of the provider sponsored organization;
(2)If the subscriber is a medicare or medicaid
beneficiary, the subscriber understands that by joining the
provider sponsored organization he or she will be limited to the
benefits provided by the provider sponsored organization, and
medicare or medicaid will pay the provider sponsored organization
for the enrollee coverage;
(3) The subscriber understands the applicable restrictions
of provider sponsored organizations, especially that an enrollee
is required to use the provider sponsored organization providers
and secure approval from the provider sponsored organization to
use health care providers outside the plan; and
(4) If the subscriber is a member of a provider sponsored
organization, the subscriber understands that he or she is
transferring to another provider sponsored organization.
(c) The provider sponsored organization may not pay a
commission, fee, money or any other form of scheduled
compensation to any health insurance agent until the subscriber's
application for the coordinated care plan has been processed and
the provider sponsored organization has confirmed the
subscriber's enrollment in the coordinated care plan by written
notice in the form prescribed by the commissioner. The
confirmation notice shall be accompanied by the evidence of
coverage required by section thirteen of this article and shall
confirm:
(1) The subscriber's transfer from his or her existing
coverage (i.e., from medicare, medicaid or another provider
sponsored organization) to the new provider sponsored
organization's coordinated care plan; and
(2) The date enrollment begins and when benefits will be
available.
(d) The enrollment process shall be considered complete
seven days after the provider sponsored organization mails the
confirmation notice and evidence of coverage to the subscriber.
Each provider sponsored organization is directly responsible for
enrollment abuses.
(e)The commissioner may, in his or her discretion, after
notice and hearing, promulgate rules as are reasonably necessary
to regulate marketing of provider sponsored organizations by
persons compensated directly or indirectly by the provider
sponsored 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 with respect
to coordinated care plans as are required to effectuate the
purposes of this article.
§33-42-18. Prohibited practices for coordinated care plans.
(a) No provider sponsored organization, or representative
thereof, with respect to a coordinated care plan 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
regarding a coordinated care plan 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:
(1) 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 coordinated care plan;
(2) 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
coordinated care plan, if the benefit or advantage or absence of
limitation, exclusion or disadvantage does not in fact exist;
(3)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 provider sponsored
organizations, and evidences of coverage therefor, to expect
benefits, services or other advantages which the evidence of
coverage does not provide or which the provider sponsored
organization issuing the evidence of coverage does not regularly
make available for enrollees covered under such evidence of
coverage; and
(4) The commissioner may further define practices which are
untrue, misleading or deceptive.
(b) No provider sponsored organization may cancel or fail to renew the coverage of an enrollee in a coordinated care plan
except for: (1) Failure to pay the charge for health care
coverage; (2) termination of the provider sponsored organization;
(3) termination of the group plan or third-party contract; (4)
the enrollee's moving out of the area served; (5) the enrollee's
moving out of an eligible group; or (6) other reasons established
in rules promulgated by the commissioner. No provider sponsored
organization may 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 provider sponsored organization's coordinated care
plan on an individual basis. A provider sponsored organization
may not disenroll an enrollee from a coordinated care plan 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.
(c) No provider sponsored organization may enroll more than
three hundred thousand persons in this state in its coordinated
care plan or plans: Provided, That a provider sponsored 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 affiliated providers or other owners of the
provider sponsored 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.
(d) No provider sponsored organization may 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: Provided, however, That a provider
sponsored organization is limited to the service area designated
in its certificate of authority.
(e) No agent of a provider sponsored organization or person
selling enrollments in a coordinated care plan may sell an
enrollment in a provider sponsored organization's coordinated
care plan unless the agent or person first discloses in writing
to the prospective subscriber the following information using the following exact terms in bold print: (1) "Services offered,"
including any exclusions or limitations; (2) "full cost,"
including copayments; (3) "facilities available"; (4)
"transportation services"; (5) "disenrollment rate"; and (6)
"participating providers." In any home solicitation, a three-day
cooling-off period applicable to consumer transactions generally
applies in the same manner as consumer transactions.
The form disclosure statement may not be used in sales for
enrollment in a coordinated care plan 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 provider sponsored organization, plus costs and an
attorney's reasonable fee.
(f) No enrollee contract may 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 provider
sponsored organization.
(g) 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 an
attorney's reasonable fee.
§33-42-19. Annual report.
Every provider sponsored organization may file with the
commissioner an annual financial statement. The annual financial
statement 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: (1) All premiums, prepayments
and other payments received; (2) expenditures to all
participating providers, by class or group of providers; (3)
expenditures to all nonparticipating health care providers, by
class or group of providers; (4) expenditures for reinsurance and
other risk-reduction arrangements; and (5) the provider sponsored
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 (3), subsection (a), section six of this article in
such form as may be required by the department of health and
human resources or a nationally recognized accreditation and
review organization or as the commissioner may by rule reasonably
require;
(d) A report of the names and residence addresses of all persons set forth in subdivision (3), subsection (b), section
five of this article who were associated with the provider
sponsored organization during the preceding year, and the amount
of wages, expense reimbursements or other payments to those
individuals for services to the provider sponsored organization,
including a full disclosure of all financial arrangements during
the preceding year required to be disclosed pursuant to
subdivision (3), subsection (b), section five of this article;
and
(e) Any other information relating to the performance of the
provider sponsored organization as is reasonably necessary to
enable the commissioner to carry out his or her duties under this
article.
§33-42-20. Examinations.
(a) The commissioner may make an examination of the affairs
of any provider sponsored organization and participating
providers 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.
(b) The commissioner may contract with the department of
health and human resources, any entity 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 provider sponsored organization and participating providers or any 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 and
experienced with entities similar to provider sponsored
organizations.
(c) Every provider sponsored organization and participating
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 provider sponsored organization and
the principals of the providers concerning their business.
(d) The provider sponsored organization is subject to the
provisions of section nine, article two of this chapter in regard
to the expense and conduct of examinations.
§33-42-21. Grievance procedure.
(a) A provider sponsored organization shall establish and maintain a grievance procedure, which has been approved by the
commissioner, to provide adequate and reasonable procedures for
the expeditious resolution of written grievances initiated by
enrollees concerning any matter relating to any provisions of the
provider sponsored organization's coordinated care plan,
including, but not limited to, claims regarding the scope of
coverage for health care services; denials, cancellations or
nonrenewals of enrollee coverage; observance of an enrollee's
rights as a patient; and the quality of the health care services
rendered.
(b) A detailed description of the provider sponsored
organization's enrollee's grievance procedure shall be included
in all group and individual contracts as well as any certificate
or member handbook provided to enrollees. This procedure shall
be administered at no cost to the enrollee. A provider sponsored
organization enrollee grievance procedure shall include the
following:
(1) Both informal and formal steps shall be available to
resolve the grievance. A grievance is not considered formal
until a written grievance is executed by the enrollee or
completed on such forms as prescribed and received by the
provider sponsored organization;
(2) Each provider sponsored organization shall designate at
least one grievance coordinator who is responsible for the implementation of the provider sponsored organization's grievance
procedure;
(3) Phone numbers shall be specified by the provider
sponsored organization for the enrollee to call to present an
informal grievance or to contact the grievance coordinator. Each
phone number shall be toll free within the enrollee's geographic
area and provide reasonable access to the provider sponsored
organization without undue delays. There must be an adequate
number of phone lines to handle incoming grievances;
(4) An address shall be included for written grievances;
(5) Each level of the grievance procedure shall have some
person with problem solving authority to participate in each step
of the grievance procedure;
(6) The provider sponsored organization shall process the
formal written enrollee grievance through all phases of the
grievance procedure in a reasonable length of time not to exceed
sixty days, unless the enrollee and provider sponsored
organization mutually agree to extend the time frame. If the
complaint involves the collection of information outside the
service area, the provider sponsored organization has thirty
additional days to process the enrollee complaint through all
phases of the grievance procedure. The time limitations
prescribed in this subdivision requiring completion of the
grievance process within sixty days shall be tolled after the provider sponsored organization has notified the enrollee, in
writing, that additional information is required in order to
properly complete review of the grievance. Upon receipt by the
provider sponsored organization of the additional information
requested, the time for completion of the grievance process set
forth in this subdivision shall resume;
(7) The enrollee grievance procedure shall state that the
enrollee has the right to appeal to the commissioner. There
shall be the additional requirement that enrollees under a third- party contract between the provider sponsored organization and a
department or division of the state shall first appeal to the
state agency responsible for administering the relevant program,
and if either of the two parties are not satisfied with the
outcome of the appeal, they may then appeal to the commissioner.
The provider sponsored organization shall provide to the enrollee
written notice of the right to appeal upon completion of the full
grievance procedure and supply the commissioner with a copy of
the final decision letter;
(8) The provider sponsored organization shall have physician
involvement in reviewing medically related grievances. Physician
involvement in the grievance process should not be limited to the
enrollee's primary care physician, but may include at least one
other physician;
(9) The provider sponsored organization shall offer to meet the enrollee during the formal grievance process. The location
of the meeting shall be at the administrative offices of the
provider sponsored organization within the service area or at a
location within the service area which is convenient to the
enrollee;
(10) The provider sponsored organization may not establish
time limits of less than one year from the date of occurrence for
the enrollee to file a formal grievance; and
(11) Each provider sponsored organization shall maintain an
accurate record of each formal grievance. Each record shall
include the following: (i) A complete description of the
grievance, the enrollee's name and address, the health care
provider's name and address and the provider sponsored
organization's name and address; (ii) a complete description of
the provider sponsored organization's factual findings and
conclusions after completion of the full formal grievance
procedure; (iii) a complete description of the provider sponsored
organization's conclusions pertaining to the grievance as well as
the provider sponsored organization's final disposition of the
grievance; and (iv) a statement as to which levels of the
grievance procedure the grievance has been processed and how many
more levels of the grievance procedure are remaining before the
grievance has been processed through the provider sponsored
organization's entire grievance procedure.
Copies of the grievances and the responses thereto shall be
available to the commissioner and the public for inspection for
three years.
(c) Any enrollee grievance in which time is of the essence
must be handled on an expedited basis, such that a reasonable
person would believe that a prevailing enrollee would be able to
realize the full benefit of a decision in his or her favor.
(d) Each provider sponsored organization shall submit to the
commissioner an annual report in a form prescribed by the
commissioner which described such grievance procedure and
contains a compilation and analysis of the grievances filed,
their disposition, and their underlying causes.
§33-42-22. Quality assurance.
(a) Each provider sponsored organization shall have in
writing a quality assurance program that 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, which
addresses both underutilization and overutilization of services;
(3) Written policies and procedures for credentialing and
recredentialing physicians and other licensed providers who fall under the scope of authority of the provider sponsored
organization;
(4) A written policy that addresses enrollee's rights and
responsibilities;
(5) The adoption of practice guidelines encouraging the use
of preventive health services;
(6) Written policies that:
(i) Stress health outcomes;
(ii) Provide opportunities for input by physicians and other
health care professionals;
(iii) Monitor and evaluate high volume and high risk
services and the care of acute and chronic conditions;
(iv) Evaluate the continuity and coordination of care that
patients receive;
(v) Make available information on quality and outcomes
measures to facilitate consumer comparison and choice of health
options; and
(vi) Evaluate the effectiveness of the quality assurance
program on an ongoing basis;
(7) Any other criteria reasonably deemed necessary by the
commissioner.
(c) As a condition of doing business in this state, each
provider sponsored organization which has been in existence for
at least three years 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 activities similar to those of provider sponsored
organizations and in the appraisal of medical practice and
quality assurance in a setting similar to that of a provider
sponsored organization: Provided, That in those instances where
a provider sponsored organization has timely applied for and
reasonably pursued an accreditation examination, but the
examination has not been completed, the provider sponsored
organization may, upon compliance with all other provisions of
this article, engage in business in this state upon submission of
proof to the commissioner of its application for review.
(d) Within thirty days of receipt of the written notice of
the accreditation and review organization by the provider
sponsored organization, the provider sponsored organization shall
submit a copy of this report to the commissioner.
(e) The commissioner shall by rule establish reasonable
standards for the quality assurance programs established by
provider sponsored organizations. Until adoption of rules
relating specifically to provider sponsored organizations, the
quality assurance and utilization management programs of provider
sponsored organizations shall comply with applicable standards
established by the commissioner for health maintenance organizations.
§33-42-23. Prohibited practices generally; penalties.
(a) It is unlawful for any person or any agents, officer or
employees thereof to coerce or require any person to agree,
either in writing or orally, not to join or become or remain a
participant in any provider sponsored organization as a condition
of securing or retaining a contract for health care services with
the person.
(b) It is unlawful for any person or any combination of
persons or any agents, officers or employees thereof to engage in
acts of coercion, intimidation or group boycott of, or any
concerted refusal to deal with, any provider because that
provider is participating or may participate in a provider
sponsored organization.
(c) It is unlawful for any provider sponsored organization
to engage in any acts of coercion, intimidation or group boycott
of, or any concerted refusal to deal with, any third-party payor
that can demonstrate to the provider sponsored organization,
either through licensure by the commissioner or otherwise, that
it is financially stable, which third-party payor seeks to
contract with the organization on a competitive, reasonable and
nonexclusive basis.
(d) Violation of any subsection (a), (b) or (c) of this
section shall be considered a violation under section eighteen, chapter forty-eight of this code.
(e) No provider sponsored 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 or use the
terms "health maintenance organization" or "HMO."
(f) Only those persons that have been issued a certificate
of authority under this article may use the words "provider
sponsored organization" or the initials "PSO" in its name,
contracts, logo or literature to imply, directly or indirectly,
that it is a provider sponsored organization or hold itself out
to be a provider sponsored organization.
(g) Neither a provider sponsored organization nor its
participating providers shall have recourse against enrollees for
amounts above those specified in the evidence of coverage as the
premium, copayment or deductible for health care services.
§33-42-24. Suspension or revocation of certificate of authority.
(a) The commissioner may suspend or revoke any certificate
of authority issued to a provider sponsored organization under
this article if he or she finds that any of the following
conditions exist:
(1) The provider sponsored organization is operating significantly in contravention of its basic organization
document, in any material breach of contract with a subscriber or
third-party payor, or in a manner contrary to that described in
and reasonably inferred from any other information submitted
under section five of this article unless amendments to the
submissions have been filed with an approval of the commissioner;
(2) The provider sponsored organization issues evidence of
coverage or uses a schedule of premiums for its coordinated care
plan which do not comply with the requirements of section
thirteen of this article;
(3) The provider sponsored organization's coordinated care
plan does not provide or arrange for basic health care services;
(4) The department of health and human resources or other
accredited entity certifies to the commissioner that: (i) The
provider sponsored organization is unable to fulfill its
obligations to furnish health care services as required under its
contract with enrollees or third-party payor; or (ii) the
provider sponsored organization does not meet the requirements of
subsection (a), section six of this article;
(5) The provider sponsored 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;
(6) The provider sponsored organization has failed to
implement a mechanism affording its enrollees an opportunity to
participate in matters of policy and operation under section
fourteen of this article;
(7) The provider sponsored organization has failed to
implement the grievance procedure required by section twenty-one
of this article in a manner to reasonably resolve valid
grievances;
(8) The provider sponsored organization, or any person on
its behalf, has advertised or merchandised its coordinated care
plan in an untrue, misrepresentative, misleading, deceptive or
unfair manner;
(9) The continued operation of the provider sponsored
organization would be hazardous to its enrollees;
(10) The provider sponsored organization has otherwise
failed to substantially comply with this article;
(11) The provider sponsored organization has violated a
lawful order of the commissioner; or
(12) The provider sponsored organization has not complied
with the requirements of section twenty-two of this article.
(b) A certificate of authority may be suspended or revoked
only after compliance with the requirements of section twenty- five of this article.
(c) When the certificate of authority of a provider sponsored organization is suspended, the provider sponsored
organization may not, during the period of the suspension, enroll
any additional enrollees except newborn children or other newly
acquired dependents of existing enrollees, and may not engage in
any advertising or solicitation whatsoever.
(d) When the certificate of authority of a provider
sponsored organization is revoked, the organization shall
proceed, immediately following the effective date of the order of
revocation, to terminate its affairs, and may not conduct further
business as a provider sponsored organization except as may be
essential to the orderly conclusion of the affairs of the
organization. It may not engage in further advertising or
solicitation whatsoever. The commissioner may, by written order,
permit such further operation of the provider sponsored
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.
§33-42-25. Administrative procedures.
(a) When the commissioner has cause to believe that grounds
for the denial of an application for a certificate of authority
exist, or that grounds for the suspension or revocation of a
certificate of authority exist, he or she shall notify the
provider sponsored organization in writing specifically stating the grounds for denial, suspension or revocation and fixing a
time of at least twenty days thereafter for a hearing on the
matter.
(b) After such hearing, or upon the failure of the provider
sponsored organization to appear at such hearing, the
commissioner shall take action as is deemed advisable on written
findings which shall be mailed to the provider sponsored
organization. The action of the commissioner is subject to
review. The court may modify, affirm or reverse the order of the
commissioner, in whole or in part.
(c) The provisions of the administrative procedures act,
chapter twenty-nine-a of this code, apply to proceedings under
this article to the extent that they are not in conflict with
subsections (a) and (b) of this section.
§33-42-26. Penalties and enforcement.
(a) The commissioner may, in lieu of suspension or
revocation of a certificate of authority under section twenty- five of this article, levy an administrative penalty in an amount
not less than one hundred dollars nor more than five thousand
dollars, if reasonable notice in writing is given of the intent
to levy the penalty and the provider sponsored organization has
a reasonable time within which to remedy the defect in its
operations which gave rise to the penalty citation. The
commissioner may augment this penalty by an amount equal to the sum that he calculates to be the damages suffered by enrollees or
other members of the public.
(b)Any person who violates any provision of this article
is guilty of a misdemeanor and, upon conviction thereof, shall be
fined not less than one thousand dollars nor more than ten
thousand dollars, or imprisoned in the county or regional jail
not more than one year, or both fined and imprisoned.
(c)(1)If the commissioner for any reason has cause to
believe that any violation of this article or rules promulgated
pursuant hereto has occurred or is threatened, prior to the levy
of a penalty or suspension or revocation of a certificate of
authority, the commissioner shall give notice to the provider
sponsored organization and to the representatives, or other
persons who appear to be involved in such suspected violation, to
arrange a conference with the alleged violators or their
authorized representatives for the purpose of attempting to
ascertain the facts relating to such suspected violation, and in
the event it appears that any violation has occurred or is
threatened, to arrive at an adequate and effective means of
correcting or preventing such violation.
(2) Proceedings under this subsection are not governed by
any formal procedural requirements, and may be conducted in such
manner as the commissioner may deem appropriate under the
circumstances. Enrollees shall be afforded notice by publication of proceedings under this subsection (c) and shall be afforded
the opportunity to intervene.
(d)(1)The commissioner may issue an order directing a
provider sponsored organization or a representative of a provider
sponsored organization to cease and desist from engaging in any
act or practice in violation of the provisions of this article or
rules promulgated pursuant hereto.
(2)Within ten days after service of the order of cease and
desist, the respondent may request a hearing on the question of
whether acts or practices in violation of this article have
occurred. Such hearings shall be conducted pursuant to chapter
twenty-nine-a of this code, and judicial review is available as
provided by chapter twenty-nine-a of this code.
(e)In the case of any violation of the provisions of this
article or rules promulgated pursuant hereto, if the commissioner
elects not to issue a cease and desist order, or in the event of
noncompliance with a cease and desist order issued pursuant to
subsection (d) of this section, the commissioner may institute a
proceeding to obtain injunctive relief, or seek other appropriate
relief, in the circuit court of the county of the principal place
of business of the provider sponsored organization.
(f)Any enrollee of or resident of the service area of the
provider sponsored organization may bring an action to enforce
any provision, standard or regulation enforceable by the commissioner. In the case of any successful action to enforce
this article, or accompanying standards or rules, the individual
shall be awarded the costs of the action together with a
reasonable attorney's fee as determined by the court.
§33-42-27. Rehabilitation, liquidation or conservation.
Any rehabilitation, liquidation or conservation of a
provider sponsored organization described in paragraph (i),
subdivision (2), subsection (a), section six of this article
shall be considered to be the rehabilitation, liquidation or
conservation of an insurance company, shall be the exclusive
remedy for rehabilitation, liquidation and conservation of such
a provider sponsored organization as provided by this article and
shall be conducted under the supervision of the commissioner
pursuant to the law governing the rehabilitation, liquidation or
conservation of insurance companies. The commissioner may apply
for an order directing him or her to rehabilitate, liquidate or
conserve such a provider sponsored organization upon any one or
more grounds set out in the rehabilitation statutes or when, in
his or her opinion, the continued operation of such a provider
sponsored organization would be hazardous either to the enrollees
or to the people of this state.
§33-42-28. Fees.
Every provider sponsored 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.
§33-42-29. Statutory construction and relationship to other
laws.
(a)Except as otherwise provided in this article,
provisions of the insurance laws, hospital or medical service
corporation laws and health maintenance organizations laws, and
rules promulgated pursuant thereto, are not applicable to any
provider sponsored organization granted a certificate of
authority under 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 provider sponsored organization granted a
certificate of authority, or its representative, may 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 provider sponsored organization authorized under
this article is not considered to be practicing medicine or any
other health care profession and is exempt from the provisions of
chapter thirty of this code relating thereto: Provided, That
each participating provider shall be licensed or otherwise
authorized under the laws of this state to provide the health
care services it is providing.
(d)A provider sponsored organization granted a certificate
of authority under this article is exempt from paying municipal
business and occupation taxes on gross income it receives from
its enrollees, subscribers or third-party payors for health care
items or services provided directly or indirectly by the provider
sponsored organization.
(e)Subject to subsections (a) through (c) of section
twenty-three of this article, a provider sponsored organization
shall not be considered a combination in restraint of trade, and
any participation agreements that contain provisions regarding
the price the organization will charge to payors or regarding the
prices the participants will charge to the organization, or regarding the allocation of gains or losses among the
participants, or regarding the delivery, quality, allocation or
location or health care services to be provided, are not
contracts that unreasonably restrain trade.
(f)The following provisions of this chapter thirty-three
are applicable to any provider sponsored organization granted a
certificate of authority under this article:
(1) Section fifteen of article four (reinsurance): Provided,
That subsection (c) of said section, shall not be applicable and
that credit for reinsurance shall be determined in accordance
with the rules adopted pursuant to section eight of this article;
(2) Section twenty of article four (cancellation, nonrenewal
or limitation of coverage);
(3) Article six (noncomplying forms);
(4) Article twelve (agents, brokers, solicitors and excess
line);
(5) Sections sixteen (coverage of children), eighteen (equal
treatment of state agency) and nineteen (coordination of benefits
with medicaid) of article fifteen;
(6) Article fifteen-b (uniform health care administration
act);
(7) Sections three (required policy provisions), three-f
(treatment of temporomandibular joint disorder and
craniomandibular disorder), eleven (coverage of children), thirteen (equal treatment of state agency) and fourteen
(coordination of benefits with medicaid) of article sixteen;
(8) Article sixteen-a (group health insurance conversion);
(9) Article sixteen-d (marketing and rate practices for
small employers);
(10) To the extent not inconsistent with the rules adopted
pursuant to section eight of this article, article thirty-nine
(disclosure of material transactions); and
(11)Article forty-one (privileges and immunity).
§33-42-30. Filings and reports as public documents.
All applications, filings and reports required under this
article shall be treated as public documents: Provided, That
where the provisions of other articles in this chapter are
applicable to provider sponsored organizations, all applications,
filings and reports required under those articles shall be
afforded the level of confidentiality as provided in those
articles.
§33-42-31. Confidentiality of medical information.
Any data or information pertaining to the diagnosis,
treatment or health of any enrollee or applicant obtained from
that person or from any provider by any provider sponsored
organization shall be held in confidence and may not be disclosed
to any person except: (a) To the extent that it may be necessary
to facilitate an assessment of the quality of care delivered pursuant to section twenty-two of this article or to review the
grievance procedure pursuant to section thirteen of this article;
(b) upon the express written consent of the enrollee or his or
her legally authorized representative; (c) pursuant to statute or
court order for the production of evidence or the discovery
thereof; (d) in the event of claim or litigation between that
person and the provider sponsored organization wherein the data
or information is pertinent; or (e) to a department or division
of the state pursuant to the terms of a third-party contract for
the provision of health care services between the provider
sponsored organization and the department or division of the
state. A provider sponsored organization is entitled to claim
any statutory privileges against the disclosure which the
provider who furnished the information to the provider sponsored
organization is entitled to claim.
§33-42-32. Enforcement; rules.
This article shall be enforced by the commissioner, who
shall have all the powers with respect thereto provided by
chapter twenty-nine-a of this code. The commissioner may
promulgate reasonable rules in accordance with chapter
twenty-nine-a of this code to implement this article but may not
expand the restrictions upon provider sponsored organizations set
forth in this article and shall amend any rules in existence on
the date of enactment of this article in conflict with this article. Anything to the contrary in this article
notwithstanding, no rule promulgated by the commissioner under
this article may be more restrictive than those promulgated by
the secretary of the United States department of health and human
services pursuant to the Balanced Budget Act of 1997. To the
extent there is a conflict between this article or rules
promulgated by the commissioner and the applicable federal law or
regulations, a provider sponsored organization that is a
certified medicare+choice organization shall be required to
comply only with the federal law or regulation. In developing
rules under this section, the commissioner shall solicit the
views of health care providers, consumers, payors and state
agencies.
§33-42-33. Authority of state agencies to contract with provider
sponsored organizations.
The department of health and human resources, including the
state medicaid program, the public employees insurance agency and
the bureau of workers' compensation are hereby authorized to
enter into third-party contracts for coordinated care plans with
provider sponsored organizations maintaining certificates of
authority under this article.
§33-42-34. Guaranty fund.
On or before the fifteenth day of January, one thousand nine
hundred ninety-nine, the commissioner shall submit a report to the Legislature setting forth a plan either to establish a
guaranty fund for provider sponsored organizations operating in
this state or to expand the guaranty fund for health maintenance
organizations established pursuant to article twenty-six-b of
this chapter to include provider sponsored organizations.
NOTE: The purpose of this bill is to allow provider
sponsored organizations that obtain and maintain certificates of
authority from the State Commissioner of Insurance to offer
coordinated care plans to individuals and third-party payors.
Coordinated care plans must cover at least basic health care
services on a full risk, prepaid basis. The requirements,
including those regarding solvency, for the certificate of
authority may not be more restrictive than those established by
the Secretary of the United States Department of Health and Human
Services pursuant to the Balanced Budget Act of 1997.
This article is new; therefore, strike-throughs and
underscoring have been omitted.