N.Y. Public Health Law § 4416: Excess reserves of certain health maintenance organizations

* § 4416. Excess reserves of certain health maintenance organizations.

1. The commissioner is authorized to require any comprehensive health

services plan issued a special purpose certificate of authority under

section forty-four hundred three-a of this article, that satisfies the

definition of corporation in subparagraph five of paragraph (a) of

section one hundred two of the not-for-profit corporation law or is

exempt from taxation under section 501 of the Internal Revenue Code of

1986 to submit all financial and other books and records the

commissioner deems necessary in order to evaluate an organization's

reserves. The commissioner, in consultation with the superintendent of

the department of financial services, shall examine such books and

records and shall issue a report on the health maintenance

organization's reserves. A request under this section may be made no

more than two times per year per plan.

2. Except for any public benefit corporation, the commissioner is

authorized to promulgate regulations establishing a presumptive reserve

ceiling for any comprehensive health services plan issued a special

purpose certificate of authority under section forty-four hundred

three-a of this article that satisfies the definition of corporation in

subparagraph five of paragraph (a) of section one hundred two of the

not-for-profit corporation law or that is exempt from taxation under

section 501 of the Internal Revenue Code of 1986. Such regulations shall

express the presumptive reserve ceiling as a percentage of the minimum

contingent reserves applicable to such health maintenance organizations.

The presumptive reserve ceiling shall be no less than one hundred fifty

percent of the minimum contingent reserves applicable to such plans. In

the event that the commissioner determines that a plan subject to this

subdivision has reserves in excess of the presumptive reserve ceiling

for two consecutive quarters, the commissioner may make a preliminary

determination that all or a portion of such reserves in excess of the

ceiling should be redeployed by depositing such excess reserves in the

health care transformation fund pursuant to subdivision three of this

section. Prior to making a preliminary determination, the commissioner

shall consider whether such redeployment is consistent with financial

soundness and efficiency and to the extent to which such reserves are

being maintained consistent with the programmatic goals of the state.

Upon making such a preliminary determination, the department shall

notify the plan and the plan shall be afforded an opportunity to submit

information to the department to justify why such reserves in excess of

the ceiling are necessary and should not be so redeployed. Provided

however, under no circumstances shall the redeployment of such reserves

for any plan exceed seven hundred and fifty million dollars annually.

3. If, after considering the information submitted by the plan, the

commissioner adheres to the preliminary determination that the reserves

in excess of the ceiling should be redeployed, the commissioner shall

direct that such reserves be deposited to the health care transformation

fund established pursuant to section ninety-two-hh of the state finance

law or its successor to be used for investment in the transformation of

health care delivery, including for capital investment, debt retirement

or restructuring, housing and other social determinants of health, or

transitional operating support to health care providers, pursuant to a

plan prepared by the commissioner and approved by the director of the

division of the budget.

4. Notwithstanding any law to the contrary, on or after August first,

two thousand eighteen no entity subject to subdivision two of this

section shall transfer or loan any funds to any subsidiary or member of

the entity's holding company system or to a member or stockholder where

a purpose of the transfer or loan is to avoid the application of this

section.

* NB Repealed August 1, 2027