Current StatusView additional legislative information at the LPITS web site.Bill Number: 616 Ratification Number: 119 Act Number 83 Introducing Body: Senate Subject: Health maintenance organizations
(A83, R119, S616)
AN ACT TO AMEND CHAPTER 25 OF TITLE 38, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO HEALTH MAINTENANCE ORGANIZATIONS SO AS TO PROVIDE COMPREHENSIVE LEGISLATION TO REGULATE HEALTH MAINTENANCE ORGANIZATIONS IN THIS STATE.
Be it enacted by the General Assembly of the State of South Carolina:
Health maintenance organizations
SECTION 1. Chapter 25 of Title 38 of the 1976 Code is amended to read:
"CHAPTER 25
Health Maintenance Organizations
Section 38-25-10. This chapter may be cited as the Health Maintenance Organization Act of 1987.
Section 38-25-20. As used in this chapter:
(1) 'Commissioner' means the Chief Insurance Commissioner.
(2) 'Department' means the Department of Health and Environmental Control.
(3) 'Basic health care services' means emergency care, inpatient hospital and physician care, and outpatient medical services. 'Basic health care services' does not include dental services, mental health services, or services for alcohol or drug abuse, although a health maintenance organization may at its option elect to provide these services in its coverage.
(4) 'Enrollee' means an individual who is enrolled in a health maintenance organization.
(5) 'Evidence of coverage' means any certificate, agreement, or contract issued to an enrollee setting out the coverage to which he is entitled.
(6) 'Health care services' means any services included in the furnishing to any individual of medical or dental care, or hospitalization or incident to the furnishing of such care or hospitalization, as well as the furnishing to any person of any and all other services for the purpose of preventing, alleviating, curing, or healing human illness, injury, or physical disability.
(7) 'Health maintenance organization' means any person that undertakes to provide or arrange for basic health care services to enrollees for a fixed prepaid premium.
(8) 'Person' means any natural or artificial person including but not limited to individuals, partnerships, associations, trusts, or corporations.
(9) 'Provider' means any physician, dentist, hospital, or other person properly licensed, where required, to furnish health care services.
Section 38-25-30. (A) No person may establish or operate a health maintenance organization in this State without first obtaining a certificate of authority from the commissioner. A foreign corporation, upon compliance with the provisions of this act, may be issued a certificate of authority upon further conditions that:
(1) the applicant is registered as a foreign corporation to do business in this State;
(2) the applicant is subject to regulation of its financial condition by authorities in its state of domicile, including regular financial examination not less frequently than once every three years; and
(3) the applicant complies with such conditions as the commissioner may prescribe with respect to the maintenance of books, records, accounts, and facilities in this State.
(B) Each application for a certificate of authority must be verified by an officer or authorized representative of the applicant, must be filed in triplicate in a form prescribed by the commissioner, and must set forth the following:
(1) a copy of the organizational documents of the applicant, such as the articles of incorporation, articles of association, partnership agreement, trust agreement, or other applicable documents, and all amendments;
(2) a copy of the bylaws and regulations, or similar document, if any, regulating the conduct of the internal affairs of the applicant;
(3) a list of the names, addresses, and official positions of the persons who are to be responsible for the management and conduct of the affairs of the applicant, including, but not limited to, all members of the board of directors, board of trustees, executive committee, or other governing board or committee, the principal offices in the case of a corporation, and the partners or members in the case of a partnership or association;
(4) a copy of any contract made or to be made between any providers or persons listed in item (3) and the applicant;
(5) a copy of the form of evidence of coverage to be issued to the enrollees;
(6) a copy of the form or group contract, if any, which is to be issued to employers, unions, trustees, or other organizations;
(7) financial statements showing the applicant's assets, liabilities, and sources of financial support. If the applicant's financial affairs are audited by independent certified public accountants, a copy of the applicant's most recent certified financial statements satisfies this requirement unless the commissioner directs that additional or more recent financial information is required for the proper administration of this chapter;
(8) a description of the proposed method of marketing, a financial plan which includes a projection of operating results anticipated until the organization has had net income for at least one year, and a statement as to the sources of working capital as well as any other sources of funding;
(9) a power of attorney duly executed by the applicant appointing the commissioner and his authorized deputies, as the lawful attorney of the applicant in this State upon whom all lawful process in any legal action or proceeding against the health maintenance organization on a cause of action arising in this State may be served;
(10) a statement reasonably describing the geographic area to be served;
(11) a description of the complaint procedures to be utilized as required under Section 38-25-110;
(12) a description of the procedures and programs to be implemented to meet the quality of health care requirements in Section 38-25-40;
(13) a description of the mechanism by which enrollees have an opportunity to participate in matters of policy and operation under Section 38-25-60(2);
(14) any other information as the commissioner may require to make the determination required in Section 38-25-40.
(C) (1) An applicant or a health maintenance organization holding a certificate of authority granted hereunder shall, unless otherwise provided for in this act, file a notice describing any material modification of the operation set out in the information required by subsection (B). The notice must be filed with the commissioner prior to the modification. If the commissioner does not disapprove within thirty days of filing, the modification is considered approved.
(2) The commissioner may promulgate regulations exempting from the filing requirements of item (1) those items he considers unnecessary.
(D) An applicant or a health maintenance organization holding a certificate of authority shall file all contracts of reinsurance or a summary of the plan of self-insurance. Any agreement between the organization and an insurer is subject to the laws of this State regarding reinsurance. All reinsurance agreements or summaries of plans of self-insurance and any modifications thereto must be filed and approved. Reinsurance agreements shall remain in full force and effect for at least thirty days following written notice by registered mail of cancellation by either party to the commissioner.
Section 38-25-40. (A) (1) Upon receipt of an application for issuance of a certificate of authority, the commissioner shall immediately transmit copies of the application and accompanying documents to the department.
(2) The department shall determine whether the applicant:
(a) has demonstrated the willingness and potential ability to assure that the health care services will be provided in a manner to assure both availability and accessibility of adequate personnel and facilities and in a manner assuring availability, accessibility, and continuity of service;
(b) has arrangements, established in accordance with the regulations promulgated by the department for an on-going quality assurance program concerning health care processes and outcomes; and
(c) has a procedure, established in accordance with regulations of the department to develop, compile, evaluate, and report statistics relating to the cost of its operations, the pattern of utilization of its services, and the availability and accessibility of its services.
(3) Within sixty days of receipt of the application for issuance of a certificate of authority, the department shall certify to the commissioner that the proposed health maintenance organization meets the requirements of item (2) or notify the commissioner that the health maintenance organization does not meet the requirements and specify in what respects it is deficient. The department shall send a copy of the certification or notification to the health maintenance organization.
(B) The commissioner shall issue a certificate of authority to any person filing an application pursuant to Section 38-25-30 if, upon payment of the application fee prescribed in Section 38-25-220, the commissioner is satisfied that:
(1) The persons responsible for the conduct of the affairs of the applicant are competent, trustworthy, and possess good reputations.
(2) The department certifies, in accordance with subsection (A), that the health maintenance organization's proposed plan of operation meets the requirements of subsection (A)(2), or the commissioner finds that any deficiencies identified by the department have been corrected.
(3) The health maintenance organization will effectively provide or arrange for the provision of basic health care services for a fixed prepaid premium, except to the extent of reasonable requirements for deductibles or co-payments.
(4) The health maintenance organization is financially responsible, can meet its obligations to enrollees and prospective enrollees, and otherwise meets the requirements of this chapter. In making this determination, the commissioner may consider, among other things:
(a) the financial soundness of the arrangements for health care services and the schedule of charges used in connection therewith;
(b) the adequacy of working capital;
(c) any agreement with an insurer, a government, or any other organization for insuring the payment of the cost of health care services or the provision for automatic applicability of an alternative coverage in the event of discontinuance of the health maintenance organization;
(d) any agreement with providers for the provision of health care services; and
(e) any deposit of cash or securities submitted in accordance with Section 38-25-130.
(5) The enrollees are afforded an opportunity to participate in matters of policy and operation pursuant to Section 38-25-60; and
(6) Nothing in the proposed method of operation, pursuant to Section 38-25-30 or by independent investigation, is contrary to the public interest.
(C) No health maintenance organization may be licensed unless it has employed or contracted with or made arrangements satisfactory to the commissioner with both physicians and hospitals to participate as providers in each geographic area to be served, as identified by the health maintenance organization under Section 38-25-30.
Section 38-25-50. (A) The powers of a health maintenance organization include, but are not limited to, the following:
(1) the purchase, lease, construction, renovation, operation, or maintenance of hospitals, medical facilities, or both, and their ancillary equipment, and such property as may reasonably be required for its principal office or for such purposes as may be necessary in the transaction of the business of the organization;
(2) the making of loans to a medical group under contract with it in furtherance of its program or the making of loans to a corporation under its control for the purpose of acquiring or constructing medical facilities and hospitals or in furtherance of a program providing health care services to enrollees;
(3) the furnishing of health care services through providers which are under contract with or employed by the health maintenance organization;
(4) the contracting with any person for the performance on its behalf of certain functions such as marketing, enrollment, and administration;
(5) the contracting with an insurance company licensed in this State for the provision of insurance, indemnity, or reimbursement against the cost of health care services provided by the health maintenance organization;
(6) the offering of other health care services, in addition to basic health care services;
(7) providing services included in federal health care programs such as 'Medicare', 'Medicaid', 'Champus', and veterans administration and other health programs funded in whole or in part by federal funds, in accordance with the laws governing these programs.
(B) (1) A health maintenance organization shall file notice, with adequate supporting information, with the commissioner prior to the exercise of any power granted in subsection (A)(1), (2), (4), or (7). The commissioner may disapprove such exercise of power if in his opinion it would adversely affect the financial soundness of the health maintenance organization and endanger its ability to meet its obligations. If the commissioner does not disapprove within thirty days of the filing, it is considered approved.
(2) The commissioner may promulgate regulations exempting from the filing requirement of item (1) those activities having a de minimis effect.
Section 38-25-60. (A) The governing body of any health maintenance organization may include providers, or other individuals, or both.
(B) The governing body shall establish a mechanism to afford the enrollees an opportunity to participate in matters of policy and operation through the establishment of advisory panels, by the use of advisory referenda on major policy decisions, or through the use of other mechanisms.
Section 38-25-70. Any director, officer, employee, or partner of a health maintenance organization who receives, collects, disburses, or invests funds in connection with the activities of an organization is responsible for the funds in a fiduciary relationship to the organization.
Section 38-25-80. (A) (1) Every enrollee is entitled to an evidence of coverage issued by the health maintenance organization. If any of the enrollee's benefits are provided through an insurance policy, the insurer shall issue a separate evidence of coverage for those benefits provided.
(2) No evidence of coverage, or amendment thereto, may be issued or delivered to any person in this State until a copy of the form of the evidence of coverage, or amendment thereto, has been filed with and approved by the commissioner.
(3) No evidence of coverage may contain provisions or statements which are unjust, unfair, inequitable, misleading, deceptive, which encourage misrepresentation, or which are untrue, misleading, or deceptive as defined in Section 38-25-140; and
(4) An evidence of coverage must contain a clear and concise statement, if a contract, a summary, or a certificate, of:
(a) the health care services and the insurance or other benefits, if any, to which the enrollee is entitled;
(b) any limitations on the services, kind of services, benefits, or kind of benefits, to be provided, including any deductible or co-payment feature;
(c) where and in what manner information is available as to how services may be obtained;
(d) the total amount of payment for health care services and the indemnity or service benefits, if any, which the enrollee is obligated to pay with respect to individual contracts;
(e) a clear and understandable description of the health maintenance organization's method for resolving enrollee complaints; and
(f) the contract period during which the enrollee is entitled to health care services and benefits, the applicable charges for coverage during that contract period, and the time and manner in which charges and benefits under the contract or certificate can be changed.
Any subsequent change may be evidenced in a separate document issued to the enrollee.
(5) The commissioner may require additional provisions in the evidence of coverage as may be
necessary to the fair, just, and equitable treatment of enrollees. The additional provisions may include, but are not limited to, any of the provisions required of health insurance policies in Chapter 35 of Title 38 and regulations promulgated thereunder, if in the opinion of the commissioner, the provisions are appropriate for the coverages provided under the health maintenance organization's evidence of coverage.
(6) The provisions of Section 38-35-941 governing discontinuance and replacement of coverage are applicable to group health maintenance organization contracts, except to the extent that the commissioner determines the provisions to be inappropriate to the coverage provided.
(B) (1) No schedule of charges for enrollee coverage for health care services may be used until a copy of the schedule has been filed with and approved by the commissioner.
(2) The charges may be established in accordance with actuarial principles for various categories of enrollees, provided that charges applicable to an enrollee may not be individually determined based on the status of his health. However, the charges may not be excessive, inadequate, or unfairly discriminatory. A certification, by a qualified actuary or other qualified person acceptable to the commissioner to the appropriateness of the use of the charges, based on reasonable assumptions, shall accompany the filing along with adequate supporting information.
(3) Nothing herein may be construed to require individual approval of rates for each contract issued in conformity with a schedule of charges filed with and approved by the commissioner.
(C) The commissioner shall within a reasonable period approve any form if the requirements of subsection (A) are met and any schedule of charges if the requirements of subsection (B) are met. It is unlawful to issue a form or to use a schedule of charges until approved. If the commissioner disapproves the filing, he shall notify the filer. In the notice, the commissioner shall specify the reasons for his disapproval. A hearing must be granted within forty-five days after a request in writing by the person filing. If the commissioner does not approve any form or schedule of charges within ninety days of the filing of the forms or charges, they are considered approved.
(D) The commissioner may require the submission of such relevant information as he considers necessary in determining whether to approve or disapprove a filing made pursuant to this section.
Section 38-25-90. (A) Every health maintenance organization shall annually, on or before the first day of March, file a report verified by at least two principal officers with the commissioner, with a copy to the department covering the preceding calendar year. The report must be on forms prescribed by the commissioner.
(B) The commissioner may require quarterly reports and any additional information considered necessary to enable the commissioner to carry out his duties under this chapter. Any such reports or information must be furnished in the time and manner prescribed by the commissioner.
(C) Upon timely written request by a principal officer setting forth reasons why the statements, reports, or information mentioned in items (A) and (B) above cannot be filed within the time required, the commissioner may, in writing, grant an extension of filing time not to exceed thirty days.
Section 38-25-100. (A) No health maintenance organization may be issued a certificate of authority unless it is possessed of net worth of at least one million, two hundred thousand dollars. Thereafter, the health maintenance organization shall at all times maintain a net worth of not less than six hundred thousand dollars. Net worth means total assets less total liabilities. Instruments acceptable to the commissioner may be utilized in determining net worth. If the commissioner determines that the number of enrollees in the health maintenance organization is excessive or may become excessive in relation to the organization's net worth as specified herein, the commissioner may require that future enrollment be limited until such time as the limitation is no longer necessary.
(B) After the expiration of a transition period of one hundred eighty days, every health maintenance organization previously licensed as of the effective date of this chapter must be possessed of a net worth of not less than six hundred thousand dollars.
Section 38-25-110. (A) (1) Every health maintenance organization shall establish and maintain a complaint system which is approved by the commissioner after consultation with the department to provide reasonable procedures for the resolution of written complaints initiated by enrollees.
(2) Each health maintenance organization shall, along with the annual report required in Section 38-25-90, submit to the commissioner an annual report in a form prescribed by the commissioner, after consultation with the department, which shall include:
(a) A summary of all written complaints handled through the health maintenance organization's approved complaint system. The summary must include the total number of complaints organized by the nature of the complaint, and the average time taken to resolve the complaint.
(b) The number, amount, and disposition of malpractice claims made by enrollees of the organization that were settled during the year by the health maintenance organization.
(B) The commissioner may furnish a copy of the annual report to the department, and he may at any time examine the complaint system. All information concerning complaints and malpractice claims filed pursuant to this section must be held in confidence and are not subject to disclosure under the Freedom of Information Act.
Section 38-25-120. With the exception of investments made in accordance with Section 38-25-50 (A)(1) and (2) and (B), the funds of a health maintenance organization must be invested only in securities or other investments permitted by the laws of this State for the investment of assets which qualify to cover policyholder obligations of life insurance companies or such other securities or investments as the commissioner may permit.
Section 38-25-130. (A) Each health maintenance
organization shall deposit and maintain with the commissioner cash or securities which qualify as legal investments under the laws of this State for public sinking funds in the amount of three hundred thousand dollars. The commissioner may require a health maintenance organization to make deposits in excess of the amount specified in this section if in his opinion the additional deposits are necessary for the protection of enrollees and the public. All income from deposits must belong to the depositing organization and must be paid to it as it becomes available. A health maintenance organization that has made a security deposit may withdraw that deposit or any part thereof after making a substitute deposit of cash, securities, or any combination of these of equal amount and value. Any securities must be approved by the commissioner before being substituted.
(B) Each health maintenance organization shall require every provider who participates in the health maintenance organization and furnishes health care services to the health maintenance organization's enrollees to execute an agreement not to bill the enrollee or otherwise hold the enrollee financially responsible for services rendered. The provider's agreement must be given on forms prescribed by the commissioner, shall extend to all services furnished to the enrollee during the time he was enrolled in the health maintenance organization, and shall apply even where the provider has not been paid by the health maintenance organization.
(C) Each health maintenance organization shall procure and maintain a policy of individual excess stop-loss coverage provided by an insurance company licensed by the State. The policy must also include provisions to cover all incurred, unpaid claim liability in the event of the health maintenance organization's termination due to insolvency or otherwise. In addition, the commissioner may require that the policy provide that the insurer will issue an individual conversion policy to any enrollee upon termination of the health maintenance organization or the enrollee's ineligibility for further coverage in the health maintenance organization. Any such conversion policy must meet at least the minimum requirements of Section 38-35-946.
Section 38-25-140. (A) No health maintenance organization, or representative thereof, may cause or knowingly permit the use of advertising which is untrue or misleading, solicitation
which is untrue or misleading, or any form of evidence of coverage which is deceptive. For purposes of this act:
(1) A statement or item of information is considered to be untrue if it does not conform to fact in any respect which is significant to a reasonable person enrolled in, or considering enrollment with, a health maintenance organization.
(2) A statement or item of information is considered to be misleading, whether or not it may be literally untrue, if, in the total context in which the statement is made or the item of information is communicated, the statement or item of information may be reasonably understood by a reasonable person, not possessing special knowledge regarding health care coverage, as indicating any benefit or advantage or the absence of any exclusion, limitation, or disadvantage of possible significance to an enrollee of, or person considering enrollment in a health maintenance organization if the benefit or advantage or absence of limitation, exclusion, or disadvantage does not in fact exist.
(3) An evidence of coverage is considered to be deceptive if the evidence of coverage taken as a whole, and with consideration given to typography and format, as well as language, causes a reasonable person, not possessing special knowledge regarding health maintenance organizations and evidences of coverage therefor, to expect benefits, services, charges, or other advantages which the evidence of coverage does not provide or which the health maintenance organization issuing the evidence of coverage does not regularly make available for enrollees covered under such evidence of coverage.
(B) Chapter 55 of Title 38 is construed to apply to health maintenance organizations and evidences of coverage except to the extent that the commissioner determines that the nature of health maintenance organizations and evidences of coverage render such sections clearly inappropriate.
(C) A health maintenance organization may not cancel or refuse to renew an enrollee, except for reasons stated in the organization's regulations applicable to all enrollees, or for the failure to pay the charge for such coverage, or for such other reasons as may be promulgated by the commissioner.
(D) No health maintenance organization may refer to itself as an insurer or use a name deceptively similar to the name or description of any insurance or surety corporation doing business in the State.
(E) Any person not in possession of a valid certificate of authority issued pursuant to this chapter may not use the phrase 'health maintenance organization' or 'HMO' in the course of operation.
Section 38-25-150. (A) An agent means a person
who is appointed or employed by a health maintenance organization and who engages in solicitation of membership in the organization. This definition does not include a person enrolling members on behalf of an employer, union, or other organization to whom a master subscriber contract has been issued.
(B) The commissioner may by regulation exempt certain classes of persons from the requirement of obtaining a license:
(1) if the functions they perform do not require special competence, trustworthiness, or the regulatory surveillance made possible by licensing; or
(2) if other existing safeguards make regulation unnecessary.
Section 38-25-160. (A) An insurance company licensed in this State may through a subsidiary or affiliate organize and operate a health maintenance organization under the provisions of this chapter. Any two or more such insurance companies or subsidiaries or affiliates thereof may jointly organize and operate a health maintenance organization.
(B) An insurer may contract with a health maintenance organization to provide insurance or similar protection against the cost of care provided through health maintenance organizations and to provide coverage in the event of the failure of the health maintenance organization to meet its obligations. Among other things, under such contracts, the insurer may make benefit payments to health maintenance organizations for health care services rendered by providers.
Section 38-25-170. (A) The commissioner may make an examination of the affairs of any health maintenance organization and providers with whom such organization has contracts, agreements, or other arrangements as often as is reasonably necessary for the protection of the interests of the people of this State, but not less frequently than once every three years. The commissioner may accept the report of an examination made by the state where the health maintenance organization is domiciled.
(B) The department may make an examination concerning the quality of health care service of any health maintenance organization and providers with whom such organization has contracts, agreements, or other arrangements as often as is reasonably necessary for the protection of the interests of the people of this State, but not less frequently than once every three years.
(C) Every health maintenance organization and provider shall submit its relevant books and records for such examinations and in every way facilitate them. For the purpose of examinations,
the commissioner and the department may administer oaths to and examine the officers and agents of the health maintenance organization and the principals of such providers concerning their business.
(D) The expenses of examinations under this section are assessed against the organization being examined and remitted to the commissioner or the department for whom the examination is being conducted.
Section 38-25-180. (A) The commissioner may suspend or revoke any certificate of authority issued to a health maintenance organization if he finds that any of the following conditions exist:
(1) The health maintenance organization is operating significantly in contravention of its basic organizational document or in a manner contrary to that described in any other information submitted under Section 38-25-30, unless amendments to such submissions have been filed with and approved by the commissioner.
(2) The health maintenance organization issues evidence of coverage or uses a schedule of charges for health care services which do not comply with the requirements of Section 38-25-80.
(3) The health maintenance organization does not provide or arrange for basic health care services.
(4) The department certifies to the commissioner that:
(a) the health maintenance organization does not meet the requirements of Section 38-25-40(A)(2); or
(b) the health maintenance organization is unable to fulfill its obligations to furnish health care services.
(5) The health maintenance organization is financially unsound or may reasonably be expected to be unable to meet its obligations to enrollees or prospective enrollees.
(6) The health maintenance organization has failed to implement a mechanism affording the enrollees an opportunity to participate in matters of policy and operation under Section 38-25-60.
(7) The health maintenance organization has failed to implement the complaint system required by Section 38-25-110 in a reasonable manner to resolve valid complaints.
(8) The health maintenance organization, or any person on its behalf, advertised or merchandised its services in an untrue, misrepresentative, misleading, deceptive, or unfair manner.
(9) The continued operation of the health maintenance organization would be hazardous to its enrollees.
(10) The health maintenance organization has otherwise failed to comply with this act or regulations promulgated thereunder.
(B) A certificate of authority is suspended or revoked only after compliance with the requirements of Section 38-25-210.
(C) When the certificate of authority of a health maintenance organization is suspended, the health maintenance organization may not, during the period of such suspension, enroll any additional enrollees except newborn children or other newly acquired dependents of existing enrollees, and may not engage in any advertising or solicitation whatsoever.
(D) When the certificate of authority of a health maintenance organization is revoked, the organization shall proceed, immediately following the effective date of the order of revocation, to wind up its affairs and shall conduct no further business except as may be essential to the orderly conclusion of the affairs of the organization. It shall engage in no further advertising or solicitation whatsoever. The commissioner may, by written order, permit such further operation of the organization as he may find to be in the best interest of enrollees, to the end that enrollees will be afforded the greatest practical opportunity to obtain continuing health care coverage.
Section 38-25-190. Any rehabilitation, liquidation, or conservation of a health maintenance organization is considered to be the rehabilitation, liquidation, or conservation of an insurance company and must be conducted under the supervision of the commissioner pursuant to the law governing the rehabilitation, liquidation, or conservation of insurance companies. The commissioner may apply for an order directing him to rehabilitate, liquidate, or conserve a health maintenance organization upon any one or more grounds set out in Sections 38-5-2010 and 38-5-2060, or when in his opinion the continued operation of the health maintenance organization would be hazardous either to the enrollees or to the people of this State. Enrollees shall have the same priority in the event of liquidation or rehabilitation as the law provides to policyholders of an insurer.
Section 38-25-200. The commissioner may, after notice and hearing, promulgate regulations to carry out the provisions of this chapter.
Section 38-25-210. (A) When the commissioner has cause to believe that grounds for the denial of an application for a certificate of authority exist, or that grounds for the suspension or revocation of a certificate of authority exist, he shall notify the health maintenance organization in writing specifically stating the grounds for denial, suspension, or revocation and fixing a time of at least thirty days thereafter for a hearing on the matter. However, if the ground for suspension or revocation relates solely to financial condition, the commissioner may immediately and without hearing suspend the certificate of authority of the health maintenance organization.
(B) The provisions of Article 3, Chapter 23, Title 1, apply to administrative proceedings under this section. Whenever the commissioner issues an order of suspension without a hearing based upon a health maintenance organization's financial condition, as authorized under subsection (A), the health maintenance organization has a right to judicial review in accordance with Section 1-23-380.
Section 38-25-220. (A) Every health maintenance organization subject to this chapter shall pay to the commissioner the following fees:
(1) for filing an application for a certificate of authority, two thousand dollars;
(2) for filing an amendment to the organization documents that requires approval, one hundred dollars;
(3) for filing each annual report, one thousand dollars;
(4) for transferring a certificate of authority from one entity to another which qualifies for such a certificate of authority, two thousand dollars.
(B) Fees charged under this section must be deposited in the general fund of the State. Fees required in this section must be fully earned when paid and are not refundable, proratable, nor transferable.
Section 38-25-230. (A) The commissioner may, in lieu of revocation or suspension of a certificate of authority under Section 38-25-180, levy an administrative penalty of not more than fifteen thousand dollars for each violation or ground as prescribed therein. A series of acts by an organization which merely implement a basic violation and are not separate and distinct violations of an independent nature are considered to be part of the basic violation and only one penalty may be imposed. A monetary penalty may be imposed under this paragraph only after notice and an opportunity to be heard have been afforded in accordance with Section 38-25-210.
(B) Whenever the commissioner has reason to believe that any person has transacted the business of, or is about to transact the business of, a health maintenance organization without a certificate of authority, he may cause a complaint to be filed in the court of common pleas of Richland County to enjoin and restrain the unauthorized transaction of business. The court has power to make and enter an order or judgment awarding such preliminary or final injunctive relief as may be necessary and proper. In addition, the court may impose a civil penalty of not more than ten thousand dollars upon such person for each unauthorized act of business so transacted.
Section 38-25-240. (A) Except as otherwise specifically provided, the provisions of the insurance law do not apply to any health maintenance organization granted a certificate of authority under this chapter.
(B) Solicitation of enrollees by a health maintenance organization granted a certificate of authority, or its representatives, are not construed to violate any provision of law relating to solicitation or advertising by health professionals.
(C) No health maintenance organization authorized under this chapter is considered to be practicing medicine, dentistry, or other healing professions.
Section 38-25-250. All applications and filings required under Section 38-25-30 and any annual and quarterly financial reports required under Section 38-25-90 must be treated as public documents. Nothing herein may be construed to require disclosure of trade secrets, privileged or confidential commercial information, or replies to a specific request for information made by the commissioner.
Section 38-25-260. Any data or information pertaining to the diagnosis, treatment, or health of any enrollee or applicant obtained from such person or from any provider by any health maintenance organization is confidential and may not be disclosed to any person except to the extent that it may be necessary to carry out the purposes of this chapter, or upon the express consent of the enrollee or applicant, or pursuant to statute or court order for the production of evidence or the discovery thereof, or in the event of claim or litigation between such person and the health maintenance organization wherein the data or information is pertinent. A health maintenance organization is entitled to claim any statutory privileges against such disclosure which the provider who furnished the information to the health maintenance organization is entitled to claim.
Section 38-25-270. The department, in carrying
out its obligations under Sections 38-25-40(A)(1), 38-25-170(B), and 38-25-180(A), may contract with qualified persons to make recommendations concerning the determinations required to be made by it. The recommendations may be accepted in full or in part by the department.
Section 38-25-280. No person may make a tender for or a request or invitation for tenders of, or enter into an agreement to exchange securities for or acquire in the open market or otherwise, any voting security of a health maintenance organization or enter into any other agreement if, after the consummation thereof, that person would, directly or indirectly, or by conversion or by exercise of any right to acquire, be in control of the health maintenance organization, and no person may enter into an agreement to merge or consolidate with or otherwise to acquire control of a health maintenance organization, unless, at the time any offer, request, or invitation is made or any agreement is entered into, or prior to the acquisition of the securities if no offer or agreement is involved, the person has filed with the commissioner and has sent to the health maintenance organization, information required by Section 38-29-70 and the offer, request, invitation, agreement, or acquisition has been approved by the commissioner. Approval by the commissioner is governed by Section 38-29-90.
Section 38-25-290. No health maintenance organization may prohibit any licensed physician, podiatrist, optometrist, or oral surgeon from participating as a provider in the organization on the basis of his profession. Nothing in this section may be construed to interfere in any way with the medical decision of the primary health care provider to use or not use any health professional on a case-bycase basis.
Section 38-25-300. There may be no monetary liability on the part of, and no cause of action may arise against, any person who participates in quality of care or utilization reviews by a peer review committee established in accordance with regulations of the department under Section 38-25-40(A)(2) for any act performed during such reviews, provided such person acts in good faith and without malice, has made a reasonable effort to obtain the facts of the matter, and reasonably believes that the action taken is warranted by the facts."
Existing health maintenance organizations to file amendments to certificate of authority
SECTION 2. Every health maintenance organization licensed prior to the effective date of this act shall submit amendments to its original application for a certificate of authority to comply with the requirements of this act. The amendments must be filed with the commissioner and implemented by the health maintenance organization within one hundred eighty days after the effective date of this act. During the one hundred eighty-day transition period, the health maintenance organization may continue to operate under statutes, regulations, and guidelines in existence prior to the effective date of this act. After the expiration of the period, any previously licensed health maintenance organization which has not complied with the requirements of this act is subject to all remedies and penalties prescribed by law including license revocation or suspension under Section 38-25-180 and delinquency proceedings under Section 38-25-190.
Time effective
SECTION 3. This act takes effect upon approval by the Governor.