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 19990S0586B0612 - 2 -
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. 19990S0586B0612 - 3 -
1 Section 2. This act shall take effect immediately. A20L35BIL/19990S0586B0612 - 4 -