(1)No corporation subject to the
provisions of part 1 of this article and this part 3 which provides a service contract
as distinguished from a fixed dollar benefit contract shall provide reimbursement
for the rendering of hospital care, medical-surgical care, or other health services on
behalf of any of its members or subscribers with hospitals except by contract which
provides for reimbursement on a prospective reimbursement basis. As used in this
part 3, prospective reimbursement means a method of reimbursement whereby
the purveyor of health services is reimbursed by each corporation subject to part 1
of this article and this part 3 for such services according to a schedule of rates,
determined and agreed upon prior to the rendering of the services by both the
purveyor of hea
Free access — add to your briefcase to read the full text and ask questions with AI
(1) No corporation subject to the
provisions of part 1 of this article and this part 3 which provides a service contract
as distinguished from a fixed dollar benefit contract shall provide reimbursement
for the rendering of hospital care, medical-surgical care, or other health services on
behalf of any of its members or subscribers with hospitals except by contract which
provides for reimbursement on a prospective reimbursement basis. As used in this
part 3, prospective reimbursement means a method of reimbursement whereby
the purveyor of health services is reimbursed by each corporation subject to part 1
of this article and this part 3 for such services according to a schedule of rates,
determined and agreed upon prior to the rendering of the services by both the
purveyor of health services and each corporation subject to the provisions of part 1
of this article and this part 3. Such rates are to remain in force during the term of
the contract or for one calendar year if a contract has a longer term, except as
adjusted as provided in this section.
(2) (a) The bases for the prospective reimbursement rates shall be:
(I) Determined mutually by the corporation and the hospital using
established accounting principles and regulations utilized in the health-care
industry for the determination of reimbursement to purveyors. Historic expenses
may be one of the bases for reimbursement but not the sole basis.
(II) Supported by current and predicted costs derived through an appropriate
budget and accounting system of the hospital, which budget and accounting
system shall be available for discussion in detail with the corporation.
(b) The hospitals' operating requirements and the services offered,
geographical characteristics, and the changes in price level indices may be
included in the bases for prospective reimbursement.
(c) All such contracts shall be, if deemed necessary and only after the
parties have exhausted all other efforts, subject to arbitration by the commissioner
under the rules and regulations established by such commissioner.
(3) In order to provide incentives for the efficient and economical utilization
of purveyor resources, the reimbursement rate agreed upon by the purveyor and
the corporation subject to part 1 of this article and this part 3 shall be neither
retroactively increased to reflect unforeseen patient costs nor retroactively
decreased as a result of efficient purveyor operation. However, gains accruing to
the purveyor as a result of a modification of those patient services, of operating
requirements, or of changes in price level indices which were included in the bases
for the setting of the prospective rate will be subject to downward adjustment.
(4) Provision shall be made between corporations subject to part 1 of this
article and this part 3 and the purveyor of health-care services for a mechanism to
determine adjustments of prospectively determined rates. Such adjustments will
occur when major events that have a fiscal impact occur which were unpredictable
or were uncontrollable by the purveyor of health-care services and which would
require a rate change to meet the financial requirements of the purveyor of health-care services.
(5) Corporations subject to part 1 of this article and this part 3 shall not pay
more for purveyor's services than will be charged to commercial insurers.
(6) Each corporation subject to the provisions of part 1 of this article and this
part 3 shall provide the commissioner with a copy of each contract entered into
under this section, within thirty days after such contract is entered into, and such
other information as the commissioner deems necessary by rule.