§ 38a-193 — Protection against insolvency.

Connecticut § 38a-193

• Jurisdiction: Connecticut
• Title 38a: Insurance
• Ch. 698a: Health Care and Related Service Groups

Text

(a) Net worth requirements. (1) Before issuing any certificate of authority to any health care center on or after July 1, 1990, the commissioner shall require that a health care center have: (A) An initial net worth of one million five hundred thousand dollars, and (B) agree to thereafter maintain the minimum net worth required under subdivision (4) of this subsection. (2) No health care center shall be licensed to transact business in this state or remain so licensed unless, (A) its net worth bears a reasonable relationship to its liabilities based upon the type, volume and nature of business transacted, and (B) its risk-based capital related to its total adjusted capital is adequate for the type of business transacted. As used in this subsection, “total adjusted capital” means the sum of a health care center's net worth and any other item in the nature of capital as deemed appropriate by the commissioner; and “risk-based capital” means the net worth of the health care center adjusted to recognize the level of risk inherent in its business, including (i) risk with respect to the health care center's assets, (ii) the risk of adverse underwriting experience with respect to the health care center's liabilities and obligations, (iii) the credit risk with respect to the health care center's business, and (iv) all other business risks and such other relevant risks as the commissioner may determine. (3) (A) In determining net worth, no debt shall be considered fully subordinated unless the subordination clause is in a form acceptable to the commissioner. Any interest obligation relating to the repayment of any subordinated debt shall be similarly subordinated. (B) The interest expenses relating to the repayment of any fully subordinated debt shall not be considered uncovered expenditures. (C) Any debt incurred by a note meeting the requirements of this section, and otherwise acceptable to the commissioner, shall not be considered a liability and shall be recorded as equity. (4) Except as provided in subdivision (3) and subdivisions (5) to (7), inclusive, of this subsection, each health care center shall maintain a minimum net worth equal to the greater of: (A) One million dollars; or (B) two per cent of its annual premium revenues as reported on the most recent annual financial statement filed with the commissioner on the first one hundred fifty million dollars of premium revenues plus one per cent of annual premium revenues in excess of one hundred fifty million dollars. No health care center authorized by the commissioner to do business in this state, on July 1, 1990, shall be required to comply with the provisions of subparagraph (B) of this subdivision until January 1, 1995. (5) Each health care center that offers or proposes to offer out-of-network benefits shall either: (A) Enter into an agreement with a duly licensed insurance company to provide coverage to subscribers and enrollees outside of the health care center's established network, subject to approval by the commissioner; or (B) Implement an out-of-network benefit system to be operated by the health care center, subject to approval by the commissioner, provided the health care center establishes and maintains its net worth at an amount equal to the greater of (i) three million dollars, (ii) two per cent of its annual premium revenues as reported on the most recent annual financial statement filed with the commissioner on the first one hundred fifty million dollars of premium revenues plus one per cent of annual premium revenues in excess of one hundred fifty million dollars, or (iii) two months of its cost of uncovered expenditures. For purposes of this subsection, “annual premium revenues” does not include revenue earned as a result of an arrangement between a health care center and the federal Centers for Medicare and Medicaid Services, on a cost or risk basis, for services to a Medicare beneficiary, or revenue earned as a result of an arrangement between a health care center and a Medicaid state agency, for services to a Medicaid beneficiary. For the purposes of this subsection, the uncovered expenditures of the health care center for the requisite two-month period shall be calculated as follows: Where: UE = Uncovered expenditures of the health care center for the requisite two-month period. X = Total year-to-date uncovered expenditures reported in the health care center's most recent statutory quarterly or annual statement. Y = Total year-to-date uncovered expenditures reported in the health care center's annual statement for the prior calendar year. Z = Total year-to-date uncovered expenditures reported in the health care center's statutory quarterly or annual statement for the current calendar quarter of the prior calendar year. (6) The total cost of the out-of-network benefits of a health care center shall not exceed ten per cent of the total cost of the health care center's claims and expenses on a quarterly basis without the prior approval of the commissioner. (7) Any health care center that provides out-of-network benefits pursuant to this subsection shall provide a quarterly report concurrent with filing of the required quarterly and annual financial statements which shall demonstrate compliance with the provisions of this subsection. (8) The commissioner may adopt regulations, in accordance with chapter 54, to implement the purposes of this subsection, including, but not limited to, provisions concerning: (A) The preparation and filing of reports by health care centers relating to risk-based capital levels and the calculation thereof; (B) the preparation and filing of comprehensive financial plans when such capital levels are reduced below minimum threshold levels; (C) the confidentiality of such reports and plans; and (D) the regulatory corrective actions the commissioner may take in the event minimum risk-based capital levels are not maintained, or the health care center's financial plans filed with the commissioner are deficient, or the health care center fails to otherwise comply with the provisions of the regulations. (b) Liabilities. Every health care center shall, when determining liabilities, include an amount estimated in the aggregate to provide for any unearned premium and for the payment of all claims for health care expenditures which have been incurred, whether reported or unreported, which are unpaid and for which such organization is or may be liable, and to provide for the expense of adjustment or settlement of such claims. Such liabilities shall be calculated in accordance with those accounting procedures and practices prescribed by the National Association of Insurance Commissioners Accounting Practices and Procedures Manual, version effective January 1, 2001, and subsequent revisions and the National Association of Insurance Commissioners Annual Statement Instructions, subject to any deviations prescribed by the commissioner. (c) Required provisions in every contract between health care centers and participating providers. (1) Every contract between a health care center and a participating provider of health care services shall be in writing and shall contain the following provisions or variations approved by the commissioner: “(A) (Name of provider or facility) .... hereby agrees that in no event, including, but not limited to, nonpayment by (name of health care center) ...., (name of health care center's) .... insolvency, or breach of this contract shall (name of provider or facility) .... bill, charge, collect a deposit from, seek compensation, remuneration, or reimbursement from, or have any recourse against a covered person or person acting on their behalf, other than (name of health care center) ...., for services provided pursuant to this contract. This provision shall not prohibit collection of cost-sharing amounts, or costs for noncovered services, which have not otherwise been paid by a primary or secondary carrier in accordance with regulatory standards for coordination of benefits, from covered persons in accordance with the terms of the covered person's health plan. (B) (Name of provider or facility) ... agrees, in the event of (name of health care center's) .... insolvency, to continue to provide the services promised in this contract to covered persons of (name of health care center) .... for the duration of the period for which premiums on behalf of the covered person were paid to (name of health care center) .... or until the covered person's discharge from inpatient facilities, whichever time is greater. (C) Notwithstanding any other provision in this contract, nothing in this contract shall be construed to modify the rights and benefits contained in the covered person's health plan. (D) (Name of provider or facility) ... may not bill the covered person for covered services, except for cost-sharing amounts, where (name of health care center) .... denies payment because the provider or facility has failed to comply with the terms or conditions of this contract. (E) (Name of provider or facility) .... further agrees (i) that the provisions of subparagraphs (A), (B), (C) and (D) of this subdivision (or citations appropriate to the contract form) .... shall survive termination of this contract regardless of the cause giving rise to termination and shall be construed to be for the benefit of (name of health care center's) .... covered persons, and (ii) that this provision supersedes any oral or written contrary agreement now existing or hereafter entered into between (name of provider or facility) .... and covered persons or persons acting on their behalf. (F) If (name of provider or facility) .... contracts with other providers or facilities who agree to provide covered services to covered persons of (name of health care center) .... with the expectation of receiving payment directly or indirectly from (name of health care center) ...., such providers or facilities shall agree to abide by the provisions of subparagraphs (A), (B), (C), (D) and (E) of this subsection (or citations appropriate to the contract form) .....” (2) In the event that the participating provider contract has not been reduced to writing as required by this subsection or that the contract fails to contain the provisions required by subdivision (1) of this subsection, the participating provider shall not collect or attempt to collect from the subscriber or enrollee sums owed by the health care center. (3) No participating provider, or agent, trustee or assignee thereof, may: (A) Maintain any action at law against a subscriber or enrollee to collect sums owed by the health care center; (B) request payment from a subscriber or enrollee for such sums; (C) request payment from a subscriber or enrollee for covered emergency services, or services rendered to an insured at an urgent crisis center, as defined in section 38a-477aa , that are provided by an out-of-network provider; or (D) request payment from a subscriber or enrollee for a surprise bill, as defined in section 38a-477aa . For purposes of this subdivision “request payment” includes, but is not limited to, submitting a bill for services not actually owed or submitting for such services an invoice or other communication detailing the cost of the services that is not clearly marked with the phrase “THIS IS NOT A BILL”. The contract between a health care center and a participating provider shall inform the participating provider that pursuant to section 20-7f , it is an unfair trade practice in violation of chapter 735a for any health care provider to request payment from a subscriber or an enrollee, other than a coinsurance, copayment, deductible or other out-of-pocket expense, for covered medical or emergency services or facility fees, as defined in section 19a-508c , or services rendered to an insured at an urgent crisis center, as defined in section 38a-477aa , or surprise bills, or to report to a credit reporting agency an enrollee's failure to pay a bill for such services when a health care center has primary responsibility for payment of such services, fees or bills. (d) Notice of termination. Every agreement to provide health care services between a provider and a health care center shall require the provider to provide at least sixty days' advance notice to the health care center to terminate the agreement.

Legislative History

(P.A. 90-68, S. 13, 16; P.A. 98-163, S. 2; P.A. 99-9, S. 4, 6; P.A. 00-30, S. 11, 14; P.A. 03-19, S. 89; P.A. 07-178, S. 1; P.A. 14-235, S. 15; P.A. 15-146, S. 12; P.A. 19-125, S. 8; P.A. 22-47, S. 51.) History: P.A. 98-163 added Subsec. (c)(3)(B) prohibiting providers from requesting payment from subscribers or enrollees of sums owed by health care centers and to define “request payment”; P.A. 99-9 amended Subsec. (a) to insert new Subdiv. (2) re requirements for license, redesignated former Subdiv. (2) as Subdiv. (4), added new Subdivs. (5) to (7) re out-of-network benefits and added new Subdiv. (8) re regulations, amended Subsec. (b) to substitute National Association of Insurance Commissioners Accounting Practices and Procedures Manual and Annual Statement Instructions for regulations adopted by the commissioner and amended Subsec. (d) to add “or” before Subdiv. (5), effective May 12, 1999; P.A. 00-30 amended Subsec. (b) to substitute “calculated” for “computed” and to add “version effective January 1, 2001, and subsequent revisions” re the National Association of Insurance Commissioners Accounting Practices and Procedures Manual, effective January 1, 2001; P.A. 03-19 replaced “Health Care Financing Administration” with “Centers for Medicare and Medicaid Services” in Subsec. (a)(5)(B), effective May 12, 2003; P.A. 07-178 amended Subsec. (a)(1) to make a technical change and Subsec. (a)(6) to allow total cost of out-of-network benefits to exceed 10% of total expenditures if health care center obtains the prior approval of commissioner and makes an uncovered expenditures insolvency deposit pursuant to Sec. 38a-193a, amended Subsec. (c)(1) to require every contract between a health care center and a participating provider to contain provisions specified in Subparas. (A) to (F) or a variation approved by commissioner, amended Subsec. (c)(2) to substitute “provisions required by subdivision (1) of this subsection” for “required prohibition”, amended Subsec. (c)(3) to require contract between a health care center and participating provider to inform such provider that it is an unfair trade practice to request payment from an enrollee, other than a copayment or deductible, for covered medical services or to report an enrollee to a credit reporting agency for not paying a bill for which the health care center is responsible, and added Subsec. (f) re required deposit by each health care center with commissioner of cash, securities or any combination thereof or other measures acceptable to commissioner, which shall have a value of not less than $500,000 at all times; P.A. 14-235 made a technical change in Subsec. (a)(3)(A); P.A. 15-146 amended Subsec. (c)(3) by adding Subparas. (C) and (D) re prohibition on participating provider or agent, trustee or assignee thereof from requesting payment from subscriber or enrollee for covered emergency services provided by out-of-network provider or for surprise bill, respectively, adding reference to facility fees and surprise bills re contract with health care provider, and making technical and conforming changes, effective July 1, 2016; P.A. 19-125 amended Subsec. (a)(6) by deleting provision re uncovered expenditures insolvency deposit established pursuant to Sec. 38a-193a, deleted Subsec. (d) re requirement that health care center have plan for insolvency, redesignated existing Subsec. (e) as Subsec. (d), and deleted Subsec. (f) re health care center deposit with commissioner, effective July 1, 2019; P.A. 22-47 amended Subsec. (c)(3) to prohibit providers from requesting payment from subscribers or enrollees for urgent crisis center services and to require contract between a health care center and participating provider to inform such provider that it is an unfair trade practice to request payment from an enrollee, other than a coinsurance, copayment or deductible, for urgent crisis center services, effective January 1, 2023.