§ 4406 — Health maintenance organizations; regulation of contracts

§ 4406. Health maintenance organizations; regulation of contracts. 1.\nThe contract between a health maintenance organization and an enrollee\nshall be subject to regulation by the superintendent as if it were a\nhealth insurance subscriber contract, and shall include, but not be\nlimited to, all mandated benefits required by article forty-three of the\ninsurance law. Such contract shall fully and clearly state the benefits\nand limitations therein provided or imposed, so as to facilitate\nunderstanding and comparisons, and to exclude provisions which may be\nmisleading or unreasonably confusing. Such contract shall be issued to\nany individual and dependents of such individual and any group of one\nhundred or fewer employees or members, exclusive of spouses and\ndependents, or to any employee or member of the group, including\ndependents, applying for such contract at any time throughout the year.\nAn individual direct payment contract shall be issued only in accordance\nwith section four thousand three hundred twenty-eight of the insurance\nlaw. The superintendent may, after giving consideration to the public\ninterest, exempt a health maintenance organization from the requirements\nof this section provided that another health insurer or health\nmaintenance organization within the health maintenance organization's\nsame holding company system, as defined in article fifteen of the\ninsurance law, including a health maintenance organization operated as a\nline of business of a health service corporation licensed under article\nforty-three of the insurance law, offers coverage that, at a minimum,\ncomplies with this section and provides all of the consumer protections\nrequired to be provided by a health maintenance organization pursuant to\nthis chapter and regulations, including those consumer protections\ncontained in sections four thousand four hundred three and four thousand\nfour hundred eight-a of this chapter. The requirements shall not apply\nto a health maintenance organization exclusively serving individuals\nenrolled pursuant to title eleven of article five of the social services\nlaw, title eleven-D of article five of the social services law, title\none-A of article twenty-five of this chapter or title eighteen of the\nfederal Social Security Act, and, further provided, that such health\nmaintenance organization shall not discontinue a contract for an\nindividual receiving comprehensive-type coverage in effect prior to\nJanuary first, two thousand four who is ineligible to purchase policies\noffered after such date pursuant to this section or section four\nthousand three hundred twenty-eight of the insurance law due to the\nprovision of 42 U.S.C. 1395ss in effect prior to January first, two\nthousand four.\n 2. (a) Upon approval of the commissioner, an organization may\nimplement an out-of-plan benefits system that allows enrollees to use\nproviders not participating in the plan pursuant to a contract,\nemployment or other association. The commissioner, in consultation with\nthe superintendent, shall not approve an organization to implement an\nout-of-plan benefits system unless the organization demonstrates that:\n (i) the requirements of this article and any regulations promulgated\nthereunder have been met and will continue to be met;\n (ii) it can establish and maintain a contingent reserve fund of not\nless than two percent of the entire net premium income for the calendar\nyear of the organization in addition to any other contingent reserve\nfund required by the commissioner in regulations subject to the approval\nof the superintendent; and\n (iii) it has established mechanisms to ensure and monitor compliance\nwith the provisions of paragraph (b) of this subdivision.\n (b) Except as provided in paragraph (c) of this subdivision, an\norganization may not permit the benefits provided pursuant to such\nout-of-plan system to exceed ten percent of the total health care\nexpenditures of the organization, as determined on a quarterly basis,\nbut such limitation shall not apply to individual direct payment\ncontracts issued pursuant to section forty-three hundred twenty-two of\nthe insurance law. In determining the amount of benefits provided in\nconnection with the use of such providers, an organization shall not\ninclude benefits provided pursuant to a referral made by a participating\nprovider or benefits provided in emergency situations.\n (c) An organization may exceed the ten percent level by up to two\npercent in any given quarter provided that the organization does not\nexceed the ten percent level by the end of the following quarter.\n (d) If the commissioner determines that an organization has permitted\nthe benefits provided pursuant to an out-of-plan system to exceed ten\npercent, except as permitted by paragraph (b) or (c) of this\nsubdivision, the commissioner may, where appropriate, assess an\norganization a civil penalty not to exceed the amount determined by\nmultiplying the percentage permitted in excess of ten percent by the\namount, in dollars, of the difference between what the organization paid\nall inpatient hospitals for such year and the amount such organization\nwould have paid such hospitals had it been a payor within the categories\nspecified in paragraph (b) of subdivision one of section twenty-eight\nhundred seven-c of this chapter and not authorized to negotiate hospital\nrates. The commissioner, in consultation with the superintendent, may\nrevoke, suspend or limit an approval issued pursuant to this subdivision\nfor non-compliance by the organization with any of the provisions of\nthis article or the rules and regulations promulgated thereunder.\n (e) The indemnification of enrollees of the services of a\nnon-participating provider may be subject to deductibles, copayments\nand/or coinsurance approved by the superintendent.\n (f) Nothing in this subdivision shall be construed to limit an\norganization's ability to manage the care of enrollees or the types of\nhealth services covered, to conduct utilization review of quality\nassurance activities.\n (g) The commissioner may prohibit an organization determined to have\nan inadequate network of participating providers from permitting new\nelections pursuant to this subdivision as of the date of notification of\nsuch determination by the commissioner. Notification of such action\nshall be given by the organization to each enrollee.\n (h) An organization providing comprehensive health services under one\nor more assumed names shall be deemed to be offering its plan through a\nline of business corresponding to each such assumed name. An\norganization may, pursuant to the provisions of this subdivision, permit\nenrollees of one or more lines of business to elect to receive services\nfrom providers not participating in such line or lines of business\nprovided, however, that with respect to each line of business such\nelections shall be permitted only to the extent authorized pursuant to\nparagraphs (b) and (c) of this subdivision.\n (i) Nothing herein shall be deemed to prohibit a health maintenance\norganization from offering services in connection with a company\nappropriately licensed pursuant to the insurance law.\n 3. (a) No contract issued pursuant to this section shall provide that\nservices of a participating hospital will be covered as out-of-network\nservices solely on the basis that the health care provider admitting or\nrendering services to the enrollee is not a participating provider.\n (b) No contract issued pursuant to this section shall provide that\nservices of a participating health care provider will be covered as\nout-of-network services solely on the basis that the services are\nrendered in a non-participating hospital.\n (c) For purposes of this subdivision, a "health care provider" is a\nhealth care professional licensed, registered or certified pursuant to\ntitle eight of the education law or a health care professional\ncomparably licensed, registered or certified by another state.\n 4. Nothing in this section shall be construed to require a health\nmaintenance organization in its provision of a comprehensive health\nservices plan to meet the requirements of an insurer under the insurance\nlaw.\n 5. If an enrollee requires nursing facility placement and is a\nresident of a continuing care retirement community authorized under\narticle forty-six of this chapter, the enrollee's primary care\npractitioner must refer the enrollee to that community's nursing\nfacility if medically appropriate; if the facility agrees to be\nreimbursed at the health maintenance organization's contract rate\nnegotiated with similar providers for similar services and supplies, or\nnegotiates a mutually agreed upon rate; and if the facility meets the\nhealth maintenance organization's guidelines and standards for the\ndelivery of medical services.\n