N.Y. Public Health Law § 4408-a: Integrated delivery systems

* § 4408-a. Integrated delivery systems. 1. Legislative purpose and

findings. The legislature intends to facilitate the ability of

integrated delivery systems to assume a larger role in delivering a full

array of health care services, from primary and preventive care through

acute inpatient hospital and post-hospital care to a defined population

for a determined price. The legislature finds that the formation and

operation of integrated delivery systems under this section will promote

the purposes of federal and state anti-referral statutes which are to

reduce over-utilization and expenditures and finds that such statutes

should not be interpreted to interfere with the development of such

integrated delivery systems or impose liability for arrangements between

an integrated delivery system certified pursuant to this section and its

participating providers and entities. The legislature further finds that

the development of integrated delivery systems will reduce costs and

enhance quality. It intends that systems acting pursuant to a

certificate of authority issued under this section shall not be subject

to state or federal antitrust liability for doing so.

2. Definitions. For the purposes of this section:

(a) "Applicant" means a separate legal entity created for the purpose

of establishing and operating an integrated delivery system. Such entity

shall be composed of or controlled by one or more affiliated providers

or one or more affiliated groups of providers.

(b) "Provider" means an entity licensed or certified under article

twenty-eight or thirty-six of this chapter; an entity licensed or

certified under article sixteen, twenty-three, thirty-one or thirty-two

of the mental hygiene law; or a health care practitioner, or combination

of health care practitioners, licensed under title eight of the

education law. Every provider shall be: (i) a natural person; (ii) a

partnership all of whose members are natural persons and that is not a

limited partnership; or (iii) a corporation none of whose stock is owned

by another corporation.

3. The commissioner, after receiving from the superintendent of

financial services the evaluations and approvals required pursuant to

subdivision seven of this section, may issue a certificate of authority

to an applicant which satisfies the conditions under this section for

issuance established by the commissioner and which seeks to deliver

comprehensive health services, on a capitated basis, including inpatient

services, to:

(a) persons who are receiving benefits under title XVIII of the

federal social security act; or

(b) persons who are receiving benefits under title XIX of the federal

social security act and commercial enrollees; or

(c) an enrollee population which includes persons receiving benefits

under titles XVIII and XIX of the federal social security act and

commercial enrollees.

4. An applicant must demonstrate to the commissioner that it will

provide at least seventy-five percent of the total expenditures for

covered health care items and services directly to its enrollees through

the provider, affiliated providers or affiliated groups of providers

comprising such applicant. The applicant shall make arrangements or

referrals for any covered health care items and services not provided

directly to its enrollees by such applicant.

5. A provider shall be deemed affiliated with another provider or

group of providers if, through contract, ownership or otherwise:

(a) one provider, directly or indirectly, owns, controls, or holds the

power to vote, or proxies for, not less than fifty-one percent of the

voting rights or governance rights of another;

(b) each provider is a participant in a lawful combination under which

each provider shares, either directly or indirectly, substantial

financial risk in connection with the activities and services of such

combination; or

(c) a provider is a corporate member of a provider organized as a

not-for-profit corporation duly designated pursuant to section six

hundred one of the not-for-profit corporation law.

6. The commissioner shall be responsible for evaluating, approving and

regulating all matters relating to delivery systems, quality of care and

access to care to be provided through the integrated delivery system. In

performing this responsibility, the commissioner shall assure:

(a) that the formation and operation of the integrated delivery system

will enhance access to health services in the area to be served; and

(b) subject to subdivision four of this section, the comprehensive

health services will be provided by the applicant through its proposed

delivery system (including through providers other than those composing,

affiliated with or controlling the applicant).

7. (a) The superintendent of financial services, in consultation with

the commissioner in accordance with a protocol to be specified in a

memorandum of understanding between the commissioner and the

superintendent of financial services regarding fiscal solvency, shall be

responsible for evaluating, approving and regulating all matters

relating to premium rates, subscriber contracts and fiscal solvency,

including reserves, surplus and provider contracts to the extent such

contracts relate to fiscal solvency matters. The superintendent of

financial services, in the administration of this subdivision, shall:

(i) be guided by the standards which govern the fiscal solvency of a

health maintenance organization, provided, however, that the

superintendent of financial services shall recognize and consider the

specific delivery components, operational capacity and financial

capability of the applicant for a certificate of authority; and

(ii) not apply financial solvency standards that exceed those required

for a health maintenance organization.

(b) Standards established pursuant to this subdivision shall be

adequate to protect the interests of the subscribers to integrated

delivery systems. The superintendent of financial services must be

satisfied that the applicant is fiscally sound, and has made adequate

provisions to pay for services:

(i) that are furnished by providers that are not affiliated with the

applicant;

(ii) to meet the specialized health care needs of certain enrollees

needing care at specialty care centers; and

(iii) for which claims are submitted after the period for which the

applicant will receive payments.

8. The integrated delivery system shall have its premiums determined

on a community-rated basis in accordance with the insurance law except

where the enrollees are eligible to receive services under title XIX of

the federal social security act in which case the premium rates shall be

established by the commissioner, in consultation with the superintendent

of financial services, subject to the approval of the director of the

division of the budget.

9. An integrated delivery system shall be subject to the provisions of

the insurance law that are applicable to health maintenance

organizations, this chapter and regulations applicable to health

maintenance organization, and any regulations promulgated by the

commissioner or superintendent of financial services to implement this

section. To the extent that the provisions of this section are

inconsistent with the provisions of this chapter or the provisions of

the insurance law, the provisions of this section shall prevail.

10. No certificate of authority for an integrated delivery system

shall be issued pursuant to this section on or after April first, two

thousand two and integrated delivery systems issued certificates before

such date shall accept no new enrollees thereafter.

* NB There are 2 § 4408-a's