PRINTER'S NO. 2264
No. 1852 Session of 1995
INTRODUCED BY KUKOVICH, KING, THOMAS, BELARDI, CURRY, MELIO,
DeWEESE, MIHALICH, STEELMAN, MANDERINO, STURLA, STABACK,
MUNDY, HALUSKA, JOSEPHS, YOUNGBLOOD, RICHARDSON, TRELLO,
PISTELLA AND MICHLOVIC, JUNE 21, 1995
REFERRED TO COMMITTEE ON HEALTH AND HUMAN SERVICES,
JUNE 21, 1995
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," adding and amending
10 definitions; further providing for services to be provided
11 and for certificates of authority; providing for a quality
12 assurance plan, for credentialing, for medical records and
13 standards, for certain rights of members, for additional
14 powers and duties of the Department of Health and for a
15 grievance procedure; and further providing for boards of
16 directors and for penalties.
17 The General Assembly of the Commonwealth of Pennsylvania
18 hereby enacts as follows:
19 Section 1. Section 3 of the act of December 29, 1972
20 (P.L.1701, No.364), known as the Health Maintenance Organization
21 Act, amended December 19, 1980 (P.L.1300, No.234) and repealed
22 in part December 20, 1982 (P.L.1409, No.326), is amended to
23 read:
1 Section 3. Definitions.--As used in this act:
2 "Basic health services" means those health services,
3 including as a minimum, but not limited to, emergency care,
4 inpatient hospital and physician care, ambulatory physician
5 care, and outpatient and preventive medical services. For
6 medical assistance beneficiaries, the term shall include all
7 services otherwise compensable under medical assistance,
8 including, but not limited to, drug and alcohol treatment under
9 sections 2334 and 2335 of the act of April 9, 1929 (P.L.177,
10 No.175), known as "The Administrative Code of 1929," early and
11 periodic screening, diagnosis and treatment for children under
12 twenty-one years of age, even if the services are not listed in
13 the State plan or the medical assistance fee schedule.
14 "Certified nurse practitioner" means a registered nurse
15 licensed in this Commonwealth who is jointly certified by the
16 State Board of Nursing and the State Board of Medicine in a
17 particular clinical specialty area and who, while functioning in
18 the expanded role as a professional nurse, performs acts of
19 medical diagnosis or prescription of medical therapeutic or
20 corrective measures in collaboration with and under the
21 direction of a physician licensed to practice medicine in this
22 Commonwealth.
23 "Commissioner" means the Insurance Commissioner of the
24 Commonwealth of Pennsylvania.
25 "Council" means the Health Care Cost Containment Council.
26 "Direct provider" means an individual who is a direct
27 provider of health care services under a benefit plan of a
28 health maintenance organization or an individual whose primary
29 current activity is the administration of health facilities in
30 which such care is provided. An individual shall not be
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1 considered a direct provider of health care solely because the
2 individual is a member of the governing body of a health-related
3 organization.
4 "Direct services ratio" means the ratio between an
5 organization's medical revenues and medical expenses.
6 "Health maintenance organization" means an organized system
7 which combines the delivery and financing of health care and
8 which provides basic health services to voluntarily enrolled
9 subscribers and to manditorily enrolled medical assistance
10 beneficiaries, including those enrolled in any entity classified
11 under Federal law as a health insuring organization for a fixed
12 prepaid fee.
13 "Independent nonprofit consumer and family satisfaction team"
14 means a not-for-profit entity utilizing a team comprised of
15 consumers and family members to perform onsite personal
16 interviews of people with severe mental illness and their
17 families to determine the consumers' degree of satisfaction and
18 if they feel their needs are being met.
19 "Managed care organization" means the party to a managed care
20 plan which agrees to provide and/or reimburse health care,
21 related equipment or services for members or subscribers.
22 "Managed care plan" means a system pursuant to which health
23 care, related equipment or services are provided for members or
24 subscribers whose access to other health care must be approved
25 by a primary care practitioner selected by or for such member or
26 subscriber from a panel of participating practitioners.
27 "Medical audit" means an onsite review of the quality of care
28 being provided and the effectiveness of the quality assurance
29 plan.
30 "Medical expenses" means the cost of providing health care
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1 services.
2 "Medical revenues" means the income generated from providing
3 health care services.
4 "Primary care physician" means a medical doctor or doctor of
5 osteopathy who supervises, coordinates and provides initial and
6 basic care to patients, initiates their referral for specialist
7 care and maintains continuity of care. The term shall include
8 pediatricians for individuals under eighteen years of age,
9 specialists in obstetrics/gynecology for woman and other
10 specialists.
11 "Primary care practitioner" means a licensed or certified
12 professional who supervises, coordinates and provides initial
13 and basic care to patients, initiates their referral for
14 specialist care and maintains continuity of care. The term shall
15 include, but not be limited to, primary care physicians,
16 certified nurse practitioners and certified nurse-midwives for
17 women during pregnancy.
18 "QAP" means a quality assurance plan.
19 "Secretary" means the Secretary of Health of the Commonwealth
20 of Pennsylvania.
21 "Specialist" means a licensed treatment professional whose
22 area of clinical practice is limited to a particular field or
23 fields.
24 Section 2. Sections 4 and 5.1(b)(1) of the act, amended or
25 added December 19, 1980 (P.L.1300, No.234), are amended to read:
26 Section 4. Services Which Shall be Provided.--(a) Any law
27 to the contrary notwithstanding, any corporation may establish,
28 maintain and operate a health maintenance organization upon
29 receipt of a certificate of authority to do so in accordance
30 with this act.
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1 (b) Such health maintenance organizations shall:
2 (1) Provide either directly or through arrangements with
3 others, basic health services to individuals enrolled;
4 (2) Provide either directly or through arrangements with
5 other persons, corporations, institutions, associations or
6 entities, basic health services; and
7 (3) Provide physicians' services (i) directly through
8 physicians who are employes of such organization, (ii) under
9 arrangements with one or more groups of physicians (organized on
10 a group practice or individual practice basis) under which each
11 such group is reimbursed for its services primarily on the basis
12 of an aggregate fixed sum or on a per capita basis, regardless
13 of whether the individual physician members of any such group
14 are paid on a fee-for-service or other basis or (iii) under
15 similar arrangements which are found by the secretary to provide
16 adequate financial incentives for the provision of quality and
17 cost-effective care.
18 (4) Every managed care plan must cover medically necessary
19 services furnished as a result of a medical emergency by a
20 nonparticipating provider.
21 Section 5.1. Certificate of Authority.--* * *
22 (b) A certificate of authority shall be jointly issued by
23 order of the commissioner and secretary when:
24 (1) The secretary has found and determined that the
25 applicant:
26 (i) has demonstrated the potential ability to assure both
27 availability and accessibility of adequate personnel and
28 facilities in a manner enhancing availability, accessibility and
29 continuity of services;
30 (ii) has [arrangements for an ongoing quality of health care
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1 assurance program] demonstrated, to the satisfaction of the
2 secretary, that its internal quality assurance system can
3 identify, evaluate and remedy problems relating to access,
4 continuity, underutilization and quality of care in accordance
5 with the requirements of section 5.2 of this act; and
6 (iii) has appropriate mechanisms whereby the health
7 maintenance organization will effectively provide or arrange for
8 the provision of basic health care services on a prepaid basis;
9 and
10 * * *
11 Section 3. The act is amended by adding sections to read:
12 Section 5.2. Clinical Quality Assurance.--(a) All managed
13 care organizations shall develop and adhere to a written plan of
14 clinical quality assurance for monitoring, evaluating and
15 assuring the delivery of quality health care by all
16 practitioners providing services on its behalf.
17 (b) The QAP shall be submitted to and approved by the
18 Department of Health prior to the organization's enrolling
19 members or for existing organizations, within six months of the
20 effective date of this section, and shall be reviewed and
21 approved by the Department of Health at least every twelve
22 months thereafter.
23 (c) The QAP shall include the elements set forth in sections
24 5.3, 5.4, 5.5, 5.6 and 5.7 of this act, those elements which the
25 Department of Health may by regulation require and the following
26 elements:
27 (1) An identifiable structure for performing quality
28 assurance functions within the organization, including required
29 regular meetings, contemporaneous records of such meetings and
30 direct accountability of the quality assurance entity or
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1 entities to the governing body of the organization.
2 (2) A detailed set of quality assurance objectives which
3 include a timetable for implementation and accomplishment.
4 (3) A system of continuous review by physicians and other
5 health professionals with feedback to participating health
6 professionals and health maintenance organization staff
7 regarding performance and patient results.
8 (4) A methodology for assuring that the range of review
9 includes all demographic groups, care settings and types of
10 services.
11 (5) A system for evaluating health outcomes, consistent with
12 current technology.
13 (6) Written guidelines for quality of care studies and
14 related monitoring activities which include specification of the
15 clinical or health service delivery areas to be monitored and
16 which reflect the population served by the managed care
17 organization in terms of age groups, disease categories and
18 special risk status.
19 (7) For the medical assistance population, a system which
20 monitors and evaluates, at a minimum, care and services in
21 certain areas of concern selected by the Department of Public
22 Welfare. The Secretary of Public Welfare is required to
23 establish standards by which managed care plans are found to
24 have improved the health status of medical assistance clients
25 enrolled in the plan with an emphasis to be placed on the health
26 needs of women and children.
27 (8) A methodology for identifying quality indicators
28 relating to specific clinical or health service delivery areas
29 which are objective, measurable and based on current knowledge
30 and clinical experience.
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1 (9) Health service delivery standards or practice
2 guidelines, consistent with standards and guidelines developed
3 by commonly accepted sources in the medical community, which are
4 aimed not only at cure, but also at maintaining function and
5 improving quality of life and which are:
6 (i) updated continuously pursuant to a mechanism specified
7 in the plan;
8 (ii) disseminated to providers as they are adopted;
9 (iii) developed for the full spectrum of populations
10 enrolled in the plan;
11 (iv) based on reasonable scientific knowledge;
12 (v) focused on the process and outcomes of health care
13 delivery, as well as access to such care; and
14 (vi) applied to the organization's providers, whether they
15 are organized in groups, as individuals or in combinations.
16 (10) A methodology for the evaluation and monitoring by
17 appropriate clinicians, including multidisciplinary teams where
18 indicated, of individual cases where there are questions about
19 care.
20 (11) Provision for periodic medical audits at least once
21 every twenty-four months by independent medical professionals
22 approved by the Department of Health which include:
23 (i) medical record reviews to measure the level of
24 conformity to the health services delivery standards or practice
25 guidelines developed in accordance with section 9 of this act;
26 (ii) a search for trigger diagnoses which indicate a
27 breakdown in delivery of care;
28 (iii) surveys of a sampling of enrollees to assure the
29 accuracy of medical records; and
30 (iv) certification of the effectiveness of the QAP.
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1 (12) A grievance system which meets the requirements of
2 section 5.7 of this act.
3 (13) Procedures for taking remedial action, including
4 suspension or termination of physicians and other professionals
5 for inappropriate service or underservice.
6 (14) Provision for a year-end written report which shall be
7 delivered promptly to the governing body and the Department of
8 Health, and which shall be available to the public at no charge,
9 which:
10 (i) addresses demonstrated improvements in quality and areas
11 of deficiency;
12 (ii) makes recommendations for corrective action; and
13 (iii) assesses the effectiveness of all past corrective
14 actions.
15 (15) A system for protecting and promoting members' rights
16 set forth in section 5.5 of this act and for communicating
17 members' rights to both providers and members.
18 (16) A system for assuring compliance with the medical
19 records standards set forth in section 5.4 of this act.
20 (17) A system of credentialing and recredentialing which
21 meets the standards set forth in section 5.3 of this act.
22 (18) A system for sharing a copy of any standard for
23 coverage decisions not explicitly covered in the subscriber
24 agreement with participating providers and the Department of
25 Health, and for making members aware of their right to a copy
26 pursuant to section 5.5(5) of this act.
27 (19) A system to insure that any initial decision regarding
28 coverage is made by a person with expertise and experience in
29 the field relevant to coverage sought or on the advice of a
30 person with such expertise and experience. The system must have
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1 protections to assure that no coverage is denied prior to review
2 by a health professional with equal or greater qualifications in
3 the relevant field.
4 (20) The organization's anticipated direct services ratio.
5 (21) The methodology to insure a provider network which
6 demonstrates the full continuum of care, geographic
7 availability, cultural sensitivity and planning for special
8 needs populations.
9 (22) Evaluations by the independent nonprofit consumer and
10 family satisfaction teams.
11 (23) A system to do discharge planning for enrollees about
12 to be discharged from State mental hospitals or correctional
13 facilities.
14 (d) The QAP shall specifically address any area which the
15 Department of Health shall identify as being of concern, in a
16 manner acceptable to the Department of Health.
17 Section 5.3. Credentialing and Recredentialing.--(a) The
18 organization shall establish credentialing standards for all
19 providers which shall be filed with the Department of Health.
20 (b) The organization shall establish an entity, answerable
21 directly to the governing body, which shall be responsible to
22 credential and recredential all providers. At a minimum, the
23 entity must initially verify the following, where applicable:
24 (1) Current license and history of suspension or revocation.
25 (2) Graduation from medical school and residency.
26 (3) Work history.
27 (4) Clinical privileges and history of suspension.
28 (5) Liability claims history.
29 (6) Certification.
30 (7) History of sanctions by Medicare or Medicaid.
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1 (8) History of revocation or suspension of DEA/BNDD number.
2 (9) History of active chemical dependency or abuse within
3 the past twelve months.
4 (10) Compliance with continuing education requirements.
5 (c) The entity must recredential all providers at least
6 every two years after a review of subsection (b)(1), (3), (4),
7 (5), (7), (8), (9) and (10) of this section, plus all data from:
8 (1) Member complaints.
9 (2) Results of quality reviews performed by the Department
10 of Health under section 5.6 of this act.
11 (3) Member satisfaction surveys performed by the council
12 under this act.
13 (4) Medical record reviews as required by section 5.4(d) of
14 this act.
15 Section 5.4. Medical Record Standards.--(a) The
16 organization must require that all providers maintain medical
17 records which are legible, dated and current and which identify
18 the author.
19 (b) The organization must require that all providers'
20 medical records contain, at a minimum, patient identification on
21 each page, biographical data, complete and current history,
22 allergies, types of immunizations for all individuals under
23 eleven years of age, diagnoses, medications and courses of
24 treatment, information on smoking, alcohol use and substance
25 abuse, all referrals and the results thereof, emergency care,
26 hospital discharge summaries and advance directives, if any have
27 been executed.
28 (c) The organization must maintain an ongoing system of
29 record review.
30 (d) The organization must require that all providers'
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1 medical records are in conformity with good professional medical
2 practice and appropriate health management.
3 Section 5.5. Member Rights.--The organization shall develop,
4 adhere to and notify each member or his parent or legal guardian
5 initially and at least every twelve months in his primary
6 language of at least the following rights:
7 (1) The right to timely, fair and effective redress of
8 grievances without retaliation by the organization or its
9 providers.
10 (2) The right to a specific methodology for obtaining timely
11 advance determinations upon request, on coverage and the extent
12 of coverage for care and services, and the right to payment by
13 the organization for care and services if a timely response to
14 such a request has not been forthcoming.
15 (3) The right to confidentiality of all medical records and
16 the right, consistent with Federal and State law, to copies of
17 all medical records at cost.
18 (4) The right to appropriate and accessible care and
19 services in a timely fashion.
20 (5) The right to a copy of written standards for coverage
21 decisions which are not explicit in the subscription agreement,
22 without charge to the member, upon request, or automatically
23 upon a rejection or limitation of services.
24 (6) The right to a copy of the subscriber agreement.
25 (7) The right not to be discriminated against because of his
26 health needs.
27 (8) The right to continue as a nongroup member if the member
28 becomes ineligible to continue as part of a group.
29 (9) The right to be treated only by licensed programs and
30 professionals in those areas of practice for which the State
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1 licenses individuals or programs.
2 (10) The right to know the credentials of any provider.
3 (11) The right to be notified in advance, upon request, of
4 the time, location and preliminary agenda for any meeting of the
5 board of directors of the organization.
6 (12) The right to give advance directives to the
7 organization and to have such directives followed, consistent
8 with Federal and State law.
9 (13) The right to refuse any treatment without jeopardizing
10 future treatment.
11 (14) The right to have prior coverage denials reviewed by a
12 practitioner with expertise in the field of coverage sought.
13 (15) The right to bring a private action at law or equity to
14 enforce any of the standards, rights or requirements of this act
15 in a court of law and to be awarded costs and legal fees, if
16 successful.
17 (16) The right to serve on a grievance review panel pursuant
18 to a selection process set forth in the grievance procedure.
19 (17) The right to a decision regarding a request for a
20 health care service or item within twenty-one days.
21 (18) The right to an independent professional second opinion
22 paid for by the organization for use by members in grievance and
23 hearing procedures.
24 (19) The right to re-enroll in a managed care plan upon
25 discharge from a State mental hospital or a correctional
26 facility, provided that the individual had been enrolled in the
27 managed care plan prior to his incarceration or hospitalization
28 and has a source of payment, including medical assistance.
29 Section 5.6. Department of Health Responsibilities.--(a)
30 The Department of Health shall review and approve each
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1 organization's QAP initially and at least every twelve months
2 thereafter.
3 (b) As part of its annual review, the Department of Health
4 shall review all of the following:
5 (1) Grievances and their disposition.
6 (2) Medical audits.
7 (3) Reports of the quality assurance entity to the governing
8 body of the organization.
9 (4) Reports of the credentialing entity to the governing
10 body.
11 (5) Enrollee satisfaction surveys.
12 (6) The rate of individuals who voluntarily disenroll and a
13 survey of such individuals.
14 (7) The provider surveys.
15 (8) The organization's actual direct services ratio compared
16 to the direct services ratio contained in the organization's
17 QAP.
18 (9) Such records of the organization and its contractors as
19 it deems appropriate to assure that the organization is adhering
20 to its quality assurance plan.
21 (c) The Department of Health shall establish standards
22 which, if not met by the organization, will cause the Department
23 of Health to require the organization to obtain an independent
24 medical audit, at the organization's expense, in addition to any
25 independent medical audit which is a part of the organization's
26 QAP, and to make the results of such audit publicly available.
27 (d) The Department of Health shall establish standards which
28 must be met before an entity can qualify to perform independent
29 medical audits. Such standards shall assure the competence of
30 the entity and shall define and prohibit any conflict of
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1 interest.
2 (e) The Department of Health shall designate categories of
3 grievance, as specified in section 5.7(e) of this act.
4 (f) The Department of Health shall:
5 (1) Establish a process for review, upon request of the
6 member or any party having standing to initiate a complaint, of
7 appeals from grievance review hearings.
8 (2) Determine the merits of and decide the substantive
9 issues relative to all such appeals after first obtaining and
10 documenting the advice of experienced professionals in the field
11 under review.
12 (3) Promptly notify the organization and the member of the
13 decision in writing.
14 (g) The Department of Health shall annually report to the
15 General Assembly on the quality of each organization in this
16 Commonwealth and make the report available to the public. The
17 report shall specifically reference the following:
18 (1) Any penalties levied and the reasons therefor.
19 (2) The number of individuals voluntarily disenrolled from
20 the organization and the reasons for such disenrollment, if
21 available.
22 (3) The number of individuals involuntarily disenrolled from
23 the organization.
24 (4) Such other information related to quality, access,
25 coordination and continuity of care and services as the
26 Department of Health deems appropriate.
27 (h) The Department of Health shall annually report to the
28 General Assembly regarding the adequacy of its own resources to
29 carry out its quality assurance mandates and specify what, if
30 any, additional resources are needed.
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1 Section 5.7. Grievance Procedure.--(a) The organization
2 shall maintain an internal grievance procedure for the prompt
3 and effective resolution of member grievances pertaining to care
4 and/or service, without charge to the member.
5 (b) The grievance procedure shall be described in writing,
6 and both the procedure and the description shall be approved by
7 the Department of Health as part of the QAP approval process.
8 (c) The organization shall provide each member twenty-one
9 years of age or older with a copy of the written description of
10 the grievance procedure in the primary language of the member:
11 (1) upon enrollment;
12 (2) at least once every twelve months thereafter; and
13 (3) upon the denial of care or services.
14 (d) The grievance procedure shall consist of a single level
15 of review, which shall be initiated by any complaint or
16 grievance to the organization, whether oral or written, made by
17 or on behalf of a member as specified in the grievance procedure
18 description. A parent, other family member for an enrollee with
19 mental illness or mental retardation, guardian, attorney-in-
20 fact, executor, administrator of estate, provider who has
21 provided care or services which are in dispute or other person
22 responsible for the bills of the member has standing to initiate
23 a complaint on behalf of a member or former member.
24 (e) Upon receipt of a grievance or complaint, the
25 organization shall refer the matter to an individual designated
26 by the organization whose oversight responsibility shall be to
27 initially investigate, categorize according to categories
28 designated by the Department of Health and respond in writing to
29 all complaints by or on behalf of members pertaining to delay,
30 denial, quality, coordination, continuity, availability or
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1 accessibility of care and/or services and to refer the matter to
2 a review committee for a hearing, as set forth in subsection (k)
3 of this section. The organization shall mail to the member or
4 complainant copies of any documents which were considered as
5 part of the determination being grieved or complained of.
6 (f) If the complaint pertains to a diagnostic or treatment
7 decision, the organization shall, in addition to referring the
8 matter to a review committee, provide for review by treatment
9 professionals experienced in the field relevant to the matter
10 complained of.
11 (g) As part of the initial investigation, the member or
12 complainant shall be invited to submit written or oral
13 statements and/or records on his behalf and shall be offered
14 assistance by the organization in obtaining records from
15 providers. In the cases involving members who have difficulty
16 communicating, the organization shall assist the member in
17 securing an independent advocate to assist the member in
18 pursuing the grievance.
19 (h) The organization shall issue to the complainant a
20 written response within ten working days of receipt of the
21 grievance or complaint, or sooner if the situation calls for an
22 immediate response, which shall state the following:
23 (1) The nature of the complaint.
24 (2) The specific steps that were taken to investigate the
25 grievance or complaint.
26 (3) What, if any, steps the organization has taken or will
27 take to remedy the problem complained of.
28 (4) The reason the organization is refusing to remedy the
29 matter complained of, if applicable.
30 (5) Relevant information pertaining to the grievance
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1 hearing, including time, location, makeup of the grievance
2 committee, purpose of the hearing, list of issues to be decided
3 and the name and telephone number of the individual to be
4 contacted for further information.
5 (i) The organization may attempt to resolve the matter
6 amicably at any time prior to the hearing.
7 (j) The review committee shall consist of at least three
8 individuals, all of whom shall be members and none of whom may
9 be employes of or hold any ownership interest in a managed care
10 organization.
11 (k) (1) The member or complainant has the right to attend
12 the review hearing but shall not be penalized for failure to
13 attend. The hearing shall be held within thirty days of receipt
14 of the complaint or grievance, at a time and location convenient
15 to the member or complainant, who shall receive at least ten
16 days' notice of the hearing. The member or complainant shall
17 have the right to request and obtain the presence of relevant
18 organization staff and providers who have been involved in the
19 matter under consideration by the committee. The member or
20 complainant shall have the right to appear personally and/or be
21 represented by an individual of his choice and, with or through
22 counsel, present evidence on his or her behalf, cross-examine
23 witnesses of the organization and present arguments on his
24 behalf, although strict rules of evidence do not apply.
25 (2) The decision shall be rendered within ten working days
26 of the hearing, shall be in writing and shall contain a
27 description of the matter in dispute, the evidence considered,
28 the remedial actions which are to be taken, if any, the reasons
29 therefor and the steps which the member or complainant must take
30 if he wishes to appeal the decision to the Department of Health.
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1 The decision shall be sent to the member or complainant and to
2 the Department of Health within ten working days of the hearing
3 and shall be binding on the organization to the extent that it
4 is favorable to the member. The member shall have the right to
5 appeal any decision of the committee to the Department of Health
6 within thirty days of its receipt pursuant to a process to be
7 established by the Department of Health.
8 (l) The grievance procedure shall contain specific
9 provisions for an expedited review hearing, where necessary.
10 (m) The secretary or his designee is empowered and
11 responsible to decide the substantive issues of any grievance
12 which is appealed from the review committee. The secretary is
13 empowered and responsible to order the managed care plan to
14 provide or pay for services in accordance with the secretary's
15 grievance decision.
16 (n) The internal grievance procedure shall not be construed
17 as mandatory on the member, nor is exhaustion of the procedure
18 to be construed as being a prerequisite to litigation against
19 the organization.
20 Section 4. Sections 7 and 15 of the act, amended December
21 19, 1980 (P.L.1300, No.234), are amended to read:
22 Section 7. Board of Directors.--(a) A corporation receiving
23 a certificate of authority to operate a health maintenance
24 organization under the provisions of this act shall be organized
25 in such a manner that assures that at least one-third of the
26 membership of the board of directors of the health maintenance
27 organization will be subscribers of the organization. Those
28 subscribers shall not be current or former employes or
29 individuals having an ownership interest in the plan, its
30 subsidiaries or a corporation having a contract to provide
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1 services to enrollees of the plan. Furthermore, those
2 subscribers shall not work in a unit of a business having
3 responsibility for employe health benefits. The subscriber board
4 members shall reflect the diversity of the plan enrollees,
5 including race, gender, age, economic status, disability and
6 health status.
7 (b) The board of directors shall be elected in the manner
8 stated in the corporation's charter or bylaws.
9 Section 15. Penalty.--(a) The commissioner and secretary
10 may suspend or revoke any certificate of authority issued to a
11 health maintenance organization under this act, or, in their
12 discretion, impose a penalty of not more than one thousand
13 dollars ($1,000) for each and every unlawful act committed, or
14 prohibit the organization from enrolling new members, or require
15 the organization to submit for approval and adhere to an
16 approved plan of correction, which shall be available for review
17 and comment by the membership or impose any combination of the
18 aforementioned penalties, if they or either of them find that
19 any of the following conditions exist:
20 (1) that the health maintenance organization is providing
21 inadequate or poor quality care, thereby creating a threat to
22 the health and safety of its subscribers;
23 (2) that the health maintenance organization is unable to
24 fulfill its contractual obligations to its subscribers;
25 (3) that the health maintenance organization or any person
26 on its behalf has advertised its services in an untrue,
27 misrepresentative, misleading, deceptive or unfair manner; or
28 (4) that the health maintenance organization has otherwise
29 failed to substantially comply with this act.
30 (b) Before the commissioner or secretary, whichever is
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1 appropriate, shall take any action as above set forth, he shall
2 give written notice to the health maintenance organization,
3 accused of violating the law, stating specifically the nature of
4 such alleged violation and fixing a time and place, at least ten
5 days thereafter, when a hearing of the matter shall be held.
6 Hearing procedure and appeals from decisions of the commissioner
7 or secretary shall be as provided in Title 2 of the Pennsylvania
8 Consolidated Statutes (relating to administrative law and
9 procedure).
10 (c) Any enrollee shall have the right to bring an action in
11 Commonwealth Court for the enforcement of any of the provisions
12 of this act.
13 Section 5. This act shall take effect in 60 days.
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