PRINTER'S NO. 612
No. 586 Session of 1999
INTRODUCED BY BELAN, COSTA, STAPLETON, WAGNER, BODACK, BELL AND
STOUT, MARCH 15, 1999
REFERRED TO BANKING AND INSURANCE, MARCH 15, 1999
AN ACT
1 Amending the act of December 29, 1972 (P.L.1701, No.364),
2 entitled "An act providing for the establishment of nonprofit
3 corporations having the purpose of establishing, maintaining
4 and operating a health service plan; providing for
5 supervision and certain regulations by the Insurance
6 Department and the Department of Health; giving the Insurance
7 Commissioner and the Secretary of Health certain powers and
8 duties; exempting the nonprofit corporations from certain
9 taxes and providing penalties," providing for certificate of
10 authority requirements.
11 The General Assembly of the Commonwealth of Pennsylvania
12 hereby enacts as follows:
13 Section 1. Section 5.1 of the act of December 29, 1972
14 (P.L.1701, No.364), known as the Health Maintenance Organization
15 Act, added December 19, 1980 (P.L.1300, No.234), is amended to
16 read:
17 Section 5.1. Certificate of Authority.--(a) Every
18 application for a certificate of authority under this act shall
19 be made to the commissioner and secretary in writing and shall
20 be in such form and contain such information as the regulations
21 of the Departments of Insurance and Health may require.
1 (b) A certificate of authority shall be jointly issued by
2 order of the commissioner and secretary for a two-year period
3 when:
4 (1) The secretary has found and determined that the
5 applicant:
6 (i) has demonstrated the potential ability to assure both
7 availability and accessibility of adequate personnel and
8 facilities in a manner enhancing availability, accessibility and
9 continuity of services;
10 (ii) has arrangements for an ongoing quality of health care
11 assurance program; [and]
12 (iii) has appropriate mechanisms whereby the health
13 maintenance organization will effectively provide or arrange for
14 the provision of basic health care services on a prepaid basis;
15 and
16 (iv) has provided utilization review schedules, dispute
17 resolution process and due process procedures for redress of
18 claim denial grievances, and has established a method through
19 which subscribers are able to provide comments relating to the
20 quality of service.
21 (2) The commissioner has found and determined that the
22 applicant has a reasonable plan to operate the health
23 maintenance organization in a financially sound manner and is
24 reasonably expected to meet its obligations to enrollees and
25 prospective enrollees. In making this determination, the
26 commissioner may consider:
27 (i) The adequacy of working capital and funding sources.
28 (ii) Arrangements for insuring the payment of the cost of
29 health care services or the provision for automatic
30 applicability of an alternative coverage in the event of
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1 discontinuance of the health maintenance organization.
2 (iii) Any agreement with providers of health care services
3 whereby they assume financial risk for the provision of services
4 to subscribers.
5 (iv) Any deposit of cash, or guaranty or maintenance or
6 minimum restricted reserves which the commissioner, by
7 regulation, may adopt to assure that the obligations to
8 subscribers will be performed.
9 (c) Within ninety days of receipt of a completed application
10 for a certificate of authority, the commissioner and secretary
11 shall provide a ninety-day period for public comment, and upon
12 completion and review shall jointly either:
13 (1) approve the application and issue a certificate of
14 authority; or
15 (2) disapprove the application specifying in writing the
16 reasons for such disapproval. Any disapproval of an application
17 may be appealed in accordance with Title 2 of the Pennsylvania
18 Consolidated Statutes (relating to administrative law and
19 procedure).
20 (d) The commissioner and secretary shall promulgate rules
21 and regulations establishing fees for certification and
22 recertification. Fifty percent of such fees collected shall be
23 used to fund the dispute resolution process provided for under
24 subsection (b)(1)(iv). The remaining balance shall be deposited
25 into a restricted account established in the General Fund for
26 the operation of the Health Maintenance Organization Review
27 Board, as provided by law. Moneys for the operation of the
28 Health Maintenance Organization Review Board shall not be
29 expended until the enactment of legislation to implement the
30 Health Maintenance Organization Review Board.
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1 Section 2. This act shall take effect immediately.
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