Subchapter D. OPERATIONAL STANDARDS FOR A HEALTH MAINTENANCE ORGANIZATION
Sec.
301.61. Operational standards.
301.62. Subscriber contracts and evidences of coverage.
301.63. Rate approvals.
301.64. Solicitors and agents.
301.65. Transfer of funds.§ 301.61. Operational standards.
A corporation receiving a certificate of authority to establish and operate an HMO under the act shall provide quality health care services in a cost-effective manner and in a manner which does not impair the corporation’s ability to deliver, arrange for the delivery of or pay for health services for its members.
Authority The provisions of this § 301.61 amended under sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. § § 66, 186, 411 and 412); and the Health Maintenance Organization Act (40 P. S. § § 1551—1567).
Source The provisions of this § 301.61 adopted February 20, 1987, effective February 21, 1987, 17 Pa.B. 807; amended September 8, 1989, effective September 9, 1989, 19 Pa.B. 3820. Immediately preceding text appears at serial page (115168).
§ 301.62. Subscriber contracts and evidences of coverage.
(a) General filing procedure.
(1) Number of copies. The HMO shall file group and nongroup contract forms and evidences of coverage, in duplicate. One copy will be retained by the Department, and the other copy will be returned to the HMO with the action taken by the Department noted thereon.
(2) Time of filing. Contract forms and evidences of coverage shall be filed with the Commissioner and deemed approved unless explicitly rejected within 60 days of the filing. Disapproval of a filing by the Commissioner may be appealed under 2 Pa.C.S. (relating to administrative law and procedure).
(3) Form number. A form shall be identified with a distinguishing form number on the cover of the form.
(4) Hypothetical data. Blank spaces in the proposed contract form and evidence of coverage shall be completed with hypothetical data demonstrating the purpose and use of the forms.
(5) Final print required. Contract forms and evidences of coverage shall be submitted in final print, in the form intended for actual issue, for formal filing. Initial submissions of contract forms and evidences of coverage may be in other than final print when the HMO desires a preliminary review of forms before preparing final printed documents.
(6) Letter of submission. The letter of submission shall be in duplicate and shall contain:
(i) The form number of each form submitted.
(ii) An explanation of the coverage provided.
(iii) An explanation of the specific purpose and use of the form.
(iv) Identification of the previously approved form which is to be replaced by the newly submitted form.
(v) Identification of forms no longer being used by the HMO.
(b) Disclosure requirements.
(1) Contract forms and evidences of coverage shall clearly and prominently state that coverage is limited to services provided by affiliated providers, except in emergency situations or when authorized in advance by an affiliated provider.
(2) Contract forms and evidences of coverage shall clearly explain the limitations on emergency and out-of-area services.
(3) Contract forms and evidences of coverage shall contain a complete, accurate and easily understood description of contract benefits, limitations and exclusions.
(4) Contract forms and evidences of coverage shall state that changes in premium rates and contract forms are subject to prior review and approval by the Department.
(c) Emergency benefits and services. The contract and evidence of coverage shall contain a specific description of benefits and services available for emergencies 24 hours a day, 7 days a week, including disclosure of restrictions on emergency benefits and services. The forms shall explain the procedures to be followed to secure medically necessary emergency health services. Emergency care service shall be covered in and out of the service area. No contract or evidence of coverage may limit the availability of emergency services within the service area only to affiliated providers. No emergency room copayment in excess of primary care copayment may be charged if the member has been referred to the emergency room by a primary care physician or the HMO and the services could have been provided in the primary care physician’s office.
(d) Copayment requirements. Contract forms, evidences of coverage and marketing literature shall contain a complete, accurate and easily understood description of copayment requirements. Copayments shall be described in specific dollar amounts.
(e) Arbitration. Contract forms and evidences of coverage may not require a member to submit to binding arbitration for settlement of a dispute between the member and the HMO.
(f) Subrogation. If the contract contains a subrogation or reimbursement provision, the provision shall state that the right of subrogation or reimbursement is not enforceable if prohibited by statute or regulation.
(g) Transplant procedures. Benefits for a covered transplant procedure shall include coverage for the medical expenses of a live donor to the extent that those medical expenses are not covered by another program.
(h) Preexisting conditions.
(1) No preexisting condition limitation provision may be more restrictive than the following:
(i) A preexisting condition is a disease or physical condition for which an individual received medical advice or treatment within 90 days immediately prior to becoming covered under the contract.
(ii) The condition shall be covered in full after the individual has been covered under the contract for 12 months.
(2) Group contracts shall give the member credit toward satisfaction of the preexisting condition limitation for the period of time the member was covered by the group’s prior health care plan or alternate health care plan.
(3) Nongroup conversion contracts shall give the member credit toward satisfaction of the preexisting condition limitation for the period of time the member was covered by the prior group contract.
(4) If a contract includes a preexisting condition limitation, the enrollment form shall contain a question and provision for answer in the following form: ‘‘NOTICE: The following question must be answered: Do you understand that the HMO will not provide coverage during the first
month(s) of enrollment for health care services required for the treatment of any disease or physical condition which required medical advice or treatment within 90 days prior to enrollment?’’(5) Contracts may not utilize individual impairment riders whereby coverage for a specific condition of a specific individual is limited or excluded.
(i) Termination of coverage.
(1) The contract and evidence of coverage shall clearly state the conditions upon which cancellation or termination may be effected by the HMO or the member.
(2) No HMO may cancel or terminate coverage of services provided a member under an HMO contract except for one of the following reasons:
(i) Failure to pay the amounts due under the contract.
(ii) Fraud or material misrepresentation in the use of services or facilities.
(iii) Violation of the material terms of the contract.
(iv) Failure to continue to meet the eligibility requirements under a group contract, if a conversion option is offered.
(v) Termination of the group contract under which the member was covered.
(vi) Failure of the member and the primary care physician to establish a satisfactory patient-physician relationship if:
(A) It is shown that the HMO has, in good faith, provided the member with the opportunity to select an alternative primary care physician.
(B) The member has repeatedly refused to follow the plan of treatment ordered by the physician.
(C) The member is notified in writing at least 30 days in advance that the HMO considers the patient-physician relationship to be unsatisfactory and specific changes are necessary in order to avoid termination subject to HMO grievance procedure.
(vii) Another reason approved by the Commissioner.
(3) No HMO may cancel or terminate a member’s coverage for services provided under an HMO contract on the basis of the status of the member’s health.
(4) No HMO may cancel or terminate a member’s coverage for services provided under an HMO contract on the basis that the subscriber has exercised rights under the HMO’s grievance system by registering a complaint against the HMO.
(5) No HMO may cancel or terminate a member’s coverage for services provided under an HMO contract without giving the member written notice of termination including the reason for termination. Termination is not effective for at least 15 days from the date of mailing. If the notice is not mailed, effective termination is from the date of delivery. For termination due to nonpayment of premium, the grace period shall be at least 30 days.
(6) A member’s misuse of a membership card will not result in termination of coverage for the member’s entire family unless the member who misuses the membership card is the subscriber.
(7) A member’s failure to establish and maintain an acceptable physician-patient relationship with a provider will not result in termination of coverage for the member’s entire family unless the member is the subscriber.
(8) If a member is an inpatient in a hospital or skilled nursing facility on the date coverage is due to terminate, coverage shall be extended until the member is discharged from the hospital or skilled nursing facility, but may be terminated when the contractual benefit limit has been reached.
(j) Coordination of benefits. The contract and evidence of coverage may contain a provision for coordination of benefits that shall be consistent with that applicable to other carriers in this Commonwealth. Provisions or rules for coordination of benefits established by an HMO may not relieve an HMO of its duty to provide or arrange for a covered health care service to a member because the member is entitled to coverage under another contract, policy or plan, including coverage provided under government programs. The HMO is required to provide health care services first and then may seek coordination of benefits.
(k) Grace period. The contract or evidence of coverage shall provide for a grace period of at least 30 days for the payment of premiums, except the first, during which coverage shall remain in effect. The contract holder shall remain liable for:
(1) The payment of the premium for the time coverage was in effect during the grace period.
(2) The member shall remain liable for copayments owed.
(l) Claims. The contract and evidence of coverage shall contain procedures for filing claims that include:
(1) A required notice to the HMO.
(2) How and when claim forms are obtained if they are required.
(3) Requirements for filing proper proofs of loss.
(4) A time limit for payment of claims.
(m) Medical necessity administration. Authorization by the member’s primary care physician, or other physician providing service at the direction of the primary care physician, shall constitute proof of medical necessity for purposes of determining a member’s potential liability.
Authority The provisions of this § 301.62 amended under sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. § § 66, 186, 411 and 412); and the Health Maintenance Organization Act (40 P. S. § § 1551—1567).
Source The provisions of this § 301.62 adopted February 20, 1987, effective February 21, 1987, 17 Pa.B. 807; amended September 8, 1989, effective September 9, 1989, 19 Pa.B. 3820. Immediately preceding text appears at serial pages (115168) to (115172).
§ 301.63. Rate approvals.
(a) Rates charged members or groups of members shall be filed with the Commissioner and be deemed approved unless explicitly rejected within 60 days of receipt of the filing by the Department. Disapproval of a rate filing by the Commissioner may be appealed under 2 Pa.C.S. (relating to administrative law and procedure).
(b) Rate filings shall describe the benefit package, identify the class of membership—for example, group, group conversion, nongroup and the like—and indicate the form number of the contract form to which the proposed premium rates will apply.
(c) Rate filings shall indicate the period during which the proposed premium rates will be effective for issues and renewals and the period for which the rates will be contractually guaranteed.
(d) Rate filings shall indicate the effective date of the last rate revision.
(e) Rate filings shall state the percentage by which the proposed rates exceed the current rates.
(f) Rate filings shall describe the procedure and identify the assumptions used to convert the total cost per member per month to the proposed premium rates. This includes the current and proposed assumptions for premium structure—ratio of family premium to single and the like—for distribution of contracts, and for number of members per contract.
(g) Rate filings shall describe the procedure and identify the inflationary trend factors used to project the proposed premiums from the initial rating period to each succeeding rating period.
(h) Rate filings shall list, for every claim component utilized by the HMO constructing the proposed premium rates, the assumed utilization, the average unit cost and the cost per member per month. Assumptions for expenses, profits, incentive margins, specialist and primary care capitations and similar items shall also be defined and listed. The rate filing shall compare in tabular fashion these assumptions with the corresponding assumptions used in calculating the current premium rates and with the actual experience data. The experience period shall be identified. Assumptions and trend factors for the proposed premium rates shall be identified and justified by using the current assumptions and the experience data. The hospital unit component shall be subdivided by hospital.
(i) For contractual capitation arrangements, rate filings shall indicate the effective and termination dates of the current contracts, the current capitation amounts and the proposed capitation amounts for contracts due to be renewed during the rating period. Filings shall identify the premium rate components which in total equal the average capitation amounts paid to providers.
(j) Rate filings shall show the number of contract months and member months exposed during the experience period.
(k) Rate filings shall show the total number of members for the four most recent calendar quarters available and the projected number of members by quarter during the rating period.
(l) Proposed premium rates shall be shown in a table which is separate from the other information in the rate filing.
Authority The provisions of this § 301.63 amended under sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. § § 66, 186, 411 and 412); and the Health Maintenance Organization Act (40 P. S. § § 1551—1567).
Source The provisions of this § 301.63 adopted February 20, 1987, effective February 21, 1987, 17 Pa.B. 807; amended September 8, 1989, effective September 9, 1989, 19 Pa.B. 3820. Immediately preceding text appears at serial pages (115172) and (126484).
§ 301.64. Solicitors and agents.
Solicitors and agents for an HMO shall be licensed as, and subject to the statutes pertaining to, insurance agents.
Source The provisions of this § 301.64 adopted February 20, 1987, effective February 21, 1987, 17 Pa.B. 807.
§ 301.65. Transfer of funds.
(a) No funds, except for the purchase of goods and contracted services, may be transferred out of this Commonwealth by an HMO without the prior approval and written consent of the Department.
(b) A licensed HMO may continue to transfer funds in accordance with a procedure or system which was in operation on February 21, 1987, if it submits for the Department’s review a complete and accurate description of the transfer procedure by April 22, 1987. If the Department disapproves of the transfer procedure and system, the HMO will be notified in writing, specifying the reason for the disapproval. The HMO will be permitted a reasonable period of time, to be identified in the notice of disapproval but not less than 45 days, in which to discontinue the transfers and return funds to this Commonwealth.
Source The provisions of this § 301.65 adopted February 20, 1987, effective February 21, 1987, 17 Pa.B. 807.
Cross References This section cited in 31 Pa. Code § 303.1 (relating to review of requests of health maintenance organizations to transfer funds out of this Commonwealth—statement of policy).
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