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.