N.Y. Public Health Law § 4406: Health maintenance organizations; regulation of contracts

§ 4406. Health maintenance organizations; regulation of contracts. 1.

The contract between a health maintenance organization and an enrollee

shall be subject to regulation by the superintendent as if it were a

health insurance subscriber contract, and shall include, but not be

limited to, all mandated benefits required by article forty-three of the

insurance law. Such contract shall fully and clearly state the benefits

and limitations therein provided or imposed, so as to facilitate

understanding and comparisons, and to exclude provisions which may be

misleading or unreasonably confusing. Such contract shall be issued to

any individual and dependents of such individual and any group of one

hundred or fewer employees or members, exclusive of spouses and

dependents, or to any employee or member of the group, including

dependents, applying for such contract at any time throughout the year.

An individual direct payment contract shall be issued only in accordance

with section four thousand three hundred twenty-eight of the insurance

law. The superintendent may, after giving consideration to the public

interest, exempt a health maintenance organization from the requirements

of this section provided that another health insurer or health

maintenance organization within the health maintenance organization's

same holding company system, as defined in article fifteen of the

insurance law, including a health maintenance organization operated as a

line of business of a health service corporation licensed under article

forty-three of the insurance law, offers coverage that, at a minimum,

complies with this section and provides all of the consumer protections

required to be provided by a health maintenance organization pursuant to

this chapter and regulations, including those consumer protections

contained in sections four thousand four hundred three and four thousand

four hundred eight-a of this chapter. The requirements shall not apply

to a health maintenance organization exclusively serving individuals

enrolled pursuant to title eleven of article five of the social services

law, title eleven-D of article five of the social services law, title

one-A of article twenty-five of this chapter or title eighteen of the

federal Social Security Act, and, further provided, that such health

maintenance organization shall not discontinue a contract for an

individual receiving comprehensive-type coverage in effect prior to

January first, two thousand four who is ineligible to purchase policies

offered after such date pursuant to this section or section four

thousand three hundred twenty-eight of the insurance law due to the

provision of 42 U.S.C. 1395ss in effect prior to January first, two

thousand four.

2. (a) Upon approval of the commissioner, an organization may

implement an out-of-plan benefits system that allows enrollees to use

providers not participating in the plan pursuant to a contract,

employment or other association. The commissioner, in consultation with

the superintendent, shall not approve an organization to implement an

out-of-plan benefits system unless the organization demonstrates that:

(i) the requirements of this article and any regulations promulgated

thereunder have been met and will continue to be met;

(ii) it can establish and maintain a contingent reserve fund of not

less than two percent of the entire net premium income for the calendar

year of the organization in addition to any other contingent reserve

fund required by the commissioner in regulations subject to the approval

of the superintendent; and

(iii) it has established mechanisms to ensure and monitor compliance

with the provisions of paragraph (b) of this subdivision.

(b) Except as provided in paragraph (c) of this subdivision, an

organization may not permit the benefits provided pursuant to such

out-of-plan system to exceed ten percent of the total health care

expenditures of the organization, as determined on a quarterly basis,

but such limitation shall not apply to individual direct payment

contracts issued pursuant to section forty-three hundred twenty-two of

the insurance law. In determining the amount of benefits provided in

connection with the use of such providers, an organization shall not

include benefits provided pursuant to a referral made by a participating

provider or benefits provided in emergency situations.

(c) An organization may exceed the ten percent level by up to two

percent in any given quarter provided that the organization does not

exceed the ten percent level by the end of the following quarter.

(d) If the commissioner determines that an organization has permitted

the benefits provided pursuant to an out-of-plan system to exceed ten

percent, except as permitted by paragraph (b) or (c) of this

subdivision, the commissioner may, where appropriate, assess an

organization a civil penalty not to exceed the amount determined by

multiplying the percentage permitted in excess of ten percent by the

amount, in dollars, of the difference between what the organization paid

all inpatient hospitals for such year and the amount such organization

would have paid such hospitals had it been a payor within the categories

specified in paragraph (b) of subdivision one of section twenty-eight

hundred seven-c of this chapter and not authorized to negotiate hospital

rates. The commissioner, in consultation with the superintendent, may

revoke, suspend or limit an approval issued pursuant to this subdivision

for non-compliance by the organization with any of the provisions of

this article or the rules and regulations promulgated thereunder.

(e) The indemnification of enrollees of the services of a

non-participating provider may be subject to deductibles, copayments

and/or coinsurance approved by the superintendent.

(f) Nothing in this subdivision shall be construed to limit an

organization's ability to manage the care of enrollees or the types of

health services covered, to conduct utilization review of quality

assurance activities.

(g) The commissioner may prohibit an organization determined to have

an inadequate network of participating providers from permitting new

elections pursuant to this subdivision as of the date of notification of

such determination by the commissioner. Notification of such action

shall be given by the organization to each enrollee.

(h) An organization providing comprehensive health services under one

or more assumed names shall be deemed to be offering its plan through a

line of business corresponding to each such assumed name. An

organization may, pursuant to the provisions of this subdivision, permit

enrollees of one or more lines of business to elect to receive services

from providers not participating in such line or lines of business

provided, however, that with respect to each line of business such

elections shall be permitted only to the extent authorized pursuant to

paragraphs (b) and (c) of this subdivision.

(i) Nothing herein shall be deemed to prohibit a health maintenance

organization from offering services in connection with a company

appropriately licensed pursuant to the insurance law.

3. (a) No contract issued pursuant to this section shall provide that

services of a participating hospital will be covered as out-of-network

services solely on the basis that the health care provider admitting or

rendering services to the enrollee is not a participating provider.

(b) No contract issued pursuant to this section shall provide that

services of a participating health care provider will be covered as

out-of-network services solely on the basis that the services are

rendered in a non-participating hospital.

(c) For purposes of this subdivision, a "health care provider" is a

health care professional licensed, registered or certified pursuant to

title eight of the education law or a health care professional

comparably licensed, registered or certified by another state.

4. Nothing in this section shall be construed to require a health

maintenance organization in its provision of a comprehensive health

services plan to meet the requirements of an insurer under the insurance

law.

5. If an enrollee requires nursing facility placement and is a

resident of a continuing care retirement community authorized under

article forty-six of this chapter, the enrollee's primary care

practitioner must refer the enrollee to that community's nursing

facility if medically appropriate; if the facility agrees to be

reimbursed at the health maintenance organization's contract rate

negotiated with similar providers for similar services and supplies, or

negotiates a mutually agreed upon rate; and if the facility meets the

health maintenance organization's guidelines and standards for the

delivery of medical services.