§ 6404 — Certificate of authority; when required; application and issuance

(a) No person shall establish, operate or engage in the business of a managed care organization or enter this State for the purpose of enrolling persons in a managed care organization without first obtaining a certificate of authority from the Insurance Commissioner. A foreign corporation shall not be eligible to apply for such certificate of authority unless it has first qualified to do business in this State as a foreign corporation pursuant to § 371 of Title 8.

(b) Application for a certificate of authority as a managed care organization shall be made on forms promulgated by the Insurance Commissioner and shall contain such information as the Commissioner shall by regulation require. The application shall be accompanied by copies of any documents which the Insurance Commissioner shall by regulation require and copies of the following documents:

(1) Certificate of incorporation;

(2) Bylaws;

(3) A list of the names and addresses of the members of the board of directors or other governing body of the corporation and its principal officers;

(4) A statement of the geographic areas in which the managed care organization proposes to operate;

(5) A statement describing how the managed care organization shall operate, including its anticipated enrollment, its basic health services, its personnel, the proposed method of marketing and a financial plan which includes a projection of operating results for the first 3 years of operation;

(6) A statement identifying the states where the managed care organization is authorized to operate, any states where it has pending an application for authorization to operate; and States where it has been cited for a violation of any laws or legislation and an explanation of any such alleged violation, including the status or outcome;

(7) Forms of proposed contracts to be offered for members who enroll on a direct payment or standard group basis;

(8) Tables of rates to be charged for such contracts or statement of the rating formulas to be used in lieu of fixed rates; and

(9) Financial statements showing the applicant’s assets, liabilities and sources of financial support; provided that if the applicant’s financial affairs are audited by an independent certified public accountant, a copy of the applicant’s most recent certified financial statement shall be deemed to satisfy this requirement.

(c) Within 60 days of receipt of an application for issuance of a certificate of authority, the Department shall determine whether the applicant, with respect to health-care services to be furnished:

(1) Has demonstrated the ability to provide such health-care services in a manner assuring availability, accessibility and continuity of services;

(2) Has arrangements for an ongoing health-care quality assurance program concerning health-care processes;

(3) Has the capability to comply with all applicable rules and regulations promulgated by the Department;

(4) Has the capability to provide or arrange for the provision to its enrollees of basic health-care services on a prepaid basis through insurance or otherwise, except to the extent of reasonable requirements of co-payments; and

(5) Has the staff and facilities to directly provide at least half of the outpatient medical care costs of its anticipated enrollees on a prepaid basis.

(d) The Commissioner shall issue a certificate of authority to the applicant when the applicant has shown to the Commissioner’s satisfaction that:

(1) The applicant meets or is able to meet the requirements of this title as set forth herein;

(2) Arrangements have been made by the applicant reasonably to assure provision of the services covered by its contracts; and

(3) The applicant is financially responsible and able to meet its obligations to members.

Legislative History

63 Del. Laws, c. 382, § 1 ; 66 Del. Laws, c. 124, §§ 1, 6, 7 ; 70 Del. Laws, c. 186, § 1 ; 71 Del. Laws, c. 229, §§ 1, 4, 5 ; 75 Del. Laws, c. 362, § 2