AN ACT RELATIVE TO MEMBERS OF FINANCIALLY TROUBLED HEALTH MAINTENANCE ORGANIZATIONS.
Whereas , The deferred operation of this act would tend to defeat its purpose, which is to protect forthwith members of financially troubled health maintenance organizations, therefore it is hereby declared to be an emergency law, necessary for the immediate preservation of the public convenience.
Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:
SECTION 1. It is hereby declared that it is necessary to protect residents of the commonwealth who are members of health maintenance organizations which may become financially troubled; to give the division of insurance the same administrative supervision, rehabilitation and liquidation authority which the division currently possesses with regard to other insurance companies; to provide members of an insolvent health maintenance organization the opportunity to obtain adequate health care and to protect members, employees and unions should a health maintenance organization declare bankruptcy. Therefore, it is hereby further found and declared that the general court recognizes that health maintenance organizations are an integral part of the health care insurance system for residents of the commonwealth and that it is in the public interest to protect the health and welfare of the residents of the commonwealth should a health maintenance organization become financially unsound. In furtherance of such public purpose, the general court herein provides procedures to be followed should the division of insurance determine that the interests of members of a financially troubled health maintenance organization are at risk.
SECTION 2. Section 10 of chapter 175 of the General Laws, as appearing in the 1998 Official Edition, is hereby amended by inserting after the word "company", in line 2, the following words:- or a health maintenance organization as defined in chapter 176G,.
SECTION 3. Section 110 of said chapter 175, as so appearing, is hereby amended by adding the following subdivision:-
(N) (1) For purposes of this subdivision, the following words shall, unless the context clearly requires otherwise, have the following meanings:-
"Carrier", a health maintenance organization authorized under chapter 176G, an insurance company authorized to provide accident and health insurance under this chapter, a nonprofit hospital service corporation authorized under chapter 176A, a nonprofit medical service corporation authorized under chapter 176B, or any other entity responsible for the payment of benefits or provision of services under a group contract.
"Replacement", the benefits provided by a succeeding carrier.
"Discontinuance", the termination of the contract between the group contract holder and a health maintenance organization authorized under chapter 176G due to the insolvency of the health maintenance organization. The word "discontinuance" does not refer to the termination of any agreement between any individual enrollee and the health maintenance organization.
(2) (a) In the event of an insolvency of a health maintenance organization, upon order of the commissioner, all other carriers that participated in the enrollment process with the insolvent health maintenance organization at a group's last regular enrollment period shall offer such group's enrollees of the insolvent health maintenance organization a 30 day enrollment period commencing upon the date of insolvency. Each carrier shall offer such enrollees of the insolvent health maintenance organization the same coverages and rates that it had offered to the enrollees of the group at its last regular enrollment period.
(b) If no other carrier had been offered to some groups whose members were enrolled in the insolvent health maintenance organization, or if the commissioner determines that the other carriers lack sufficient health care delivery resources to assure that health care services will be available and accessible to all of the group's enrollees of the insolvent health maintenance organization, then the commissioner shall allocate equitably the insolvent health maintenance organization's group contracts for such groups among all health maintenance organizations that operate within a portion of the insolvent health maintenance organization's service area as provided in paragraph (2) of subsection (b) of section 23 of chapter 176G.
(3) (a) Any carrier providing replacement coverage with respect to group hospital, medical or surgical expense or service benefits within 60 days from the date of discontinuance of a prior health maintenance organization contract or policy providing such hospital, medical or surgical expense or service benefits shall immediately cover all enrollees who were validly covered under the previous health maintenance organization contract or policy at the date of discontinuance and who would otherwise be eligible for coverage under the succeeding carrier's contract, regardless of any provisions of the contract relating to active employment or hospital confinement or pregnancy.
(b) Except to the extent benefits for the condition would have been reduced or excluded under the prior carrier's contract or policy, no provision in a succeeding carrier's contract of replacement coverage that would operate to reduce or exclude benefits on the basis that the condition giving rise to benefits preexisted the effective date of the succeeding carrier's contract shall be applied with respect to those enrollees validly covered under the prior carrier's contract or policy on the date of discontinuance.
SECTION 4. Section 3 of chapter 175J of the General Laws, as so appearing, is hereby amended by adding the following subsection:-
(F) The commissioner may employ staff personnel and outside counsel and other consultants as may be necessary for the proper conduct of the administrative supervision. All reasonable costs of such outside counsel and other consultants, including the costs attributable to the use of staff personnel, shall be borne by the insurer under administrative supervision.
SECTION 5. Chapter 176A of the General Laws, as so appearing, is hereby amended by adding the following section:-
Section 33. (a) For purposes of this section, the following words shall, unless the context clearly requires otherwise, have the following meanings:-
"Carrier", a health maintenance organization authorized under chapter 176G, an insurance company authorized to provide accident and health insurance under chapter 175, a nonprofit hospital service corporation authorized under this chapter, a nonprofit medical service corporation authorized under chapter 176B, or any other entity responsible for the payment of benefits or provision of services under a group contract.
"Replacement", the benefits provided by a succeeding carrier.
"Discontinuance", the termination of the contract between the group contract holder and a health maintenance organization authorized under chapter 176G due to the insolvency of the health maintenance organization. The word "discontinuance" does not refer to the termination of any agreement between any individual enrollee and the health maintenance organization.
(b) (1) In the event of an insolvency of a health maintenance organization authorized under chapter 176G, upon order of the commissioner, all other carriers that participated in the enrollment process with the insolvent health maintenance organization at a group's last regular enrollment period shall offer such group's enrollees of the insolvent health maintenance organization a 30 day enrollment period commencing upon the date of insolvency. Each carrier shall offer such enrollees of the insolvent health maintenance organization the same coverages and rates that it had offered to the enrollees of the group at its last regular enrollment period.
(2) If no other carrier had been offered to some groups whose members were enrolled in the insolvent health maintenance organization, or if the commissioner determines that the other carriers lack sufficient health care delivery resources to assure that health care services will be available and accessible to all of the group's enrollees of the insolvent health maintenance organization, then the commissioner shall allocate equitably the insolvent health maintenance organization's group contracts for such groups among all health maintenance organizations that operate within a portion of the insolvent health maintenance organization's service area as provided in paragraph (2) of subsection (b) of section 23 of chapter 176G.
(c) (1) Any carrier providing replacement coverage with respect to group hospital, medical or surgical expense or service benefits within 60 days from the date of discontinuance of a prior health maintenance organization contract or policy providing such hospital, medical or surgical expense or service benefits shall immediately cover all enrollees who were validly covered under the previous health maintenance organization contract or policy at the date of discontinuance and who would otherwise be eligible for coverage under the succeeding carrier's contract, regardless of any provisions of the contract relating to active employment or hospital confinement or pregnancy.
(2) Except to the extent benefits for the condition would have been reduced or excluded under the prior carrier's contract or policy, no provision in a succeeding carrier's contract of replacement coverage that would operate to reduce or exclude benefits on the basis that the condition giving rise to benefits preexisted the effective date of the succeeding carrier's contract shall be applied with respect to those enrollees validly covered under the prior carrier's contract or policy on the date of discontinuance.
SECTION 6. Chapter 176B of the General Laws, as so appearing, is hereby amended by adding the following section:-
Section 21. (a) For purposes of this section, the following words shall, unless the context clearly requires otherwise, have the following meanings:-
"Carrier", a health maintenance organization authorized under chapter 176G, an insurance company authorized to provide accident and health insurance under chapter 175, a nonprofit hospital service corporation authorized under chapter 176A, a nonprofit medical service corporation authorized under this chapter, or any other entity responsible for the payment of benefits or provision of services under a group contract.
"Replacement", the benefits provided by a succeeding carrier.
"Discontinuance", the termination of the contract between the group contract holder and a health maintenance organization authorized under chapter 176G due to the insolvency of the health maintenance organization. The word "discontinuance" does not refer to the termination of any agreement between any individual enrollee and the health maintenance organization.
(b) (1) In the event of an insolvency of a health maintenance organization authorized under chapter 176G, upon order of the commissioner, all other carriers that participated in the enrollment process with the insolvent health maintenance organization at a group's last regular enrollment period shall offer such group's enrollees of the insolvent health maintenance organization a 30 day enrollment period commencing upon the date of insolvency. Each carrier shall offer such enrollees of the insolvent health maintenance organization the same coverages and rates that it had offered to the enrollees of the group at its last regular enrollment period.
(2) If no other carrier had been offered to some groups whose members were enrolled in the insolvent health maintenance organization, or if the commissioner determines that the other carriers lack sufficient health care delivery resources to assure that health care services will be available and accessible to all of the group's enrollees of the insolvent health maintenance organization, then the commissioner shall allocate equitably the insolvent health maintenance organization's group contracts for such groups among all health maintenance organizations that operate within a portion of the insolvent health maintenance organization's service area as provided in paragraph (2) of subsection (b) of section 23 of chapter 176G.
(c) (1) Any carrier providing replacement coverage with respect to group hospital, medical or surgical expense or service benefits within 60 days from the date of discontinuance of a prior health maintenance organization contract or policy providing such hospital, medical or surgical expense or service benefits shall immediately cover all enrollees who were validly covered under the previous health maintenance organization contract or policy at the date of discontinuance and who would otherwise be eligible for coverage under the succeeding carrier's contract, regardless of any provisions of the contract relating to active employment or hospital confinement or pregnancy.
(2) Except to the extent benefits for the condition would have been reduced or excluded under the prior carrier's contract or policy, no provision in a succeeding carrier's contract of replacement coverage that would operate to reduce or exclude benefits on the basis that the condition giving rise to benefits preexisted the effective date of the succeeding carrier's contract shall be applied with respect to those enrollees validly covered under the prior carrier's contract or policy on the date of discontinuance.
SECTION 7. Chapter 176G of the General Laws, as so appearing, is hereby amended by adding the following four sections:-
Section 20. Any administrative supervision, rehabilitation or liquidation of a health maintenance organization shall be deemed to be the administrative supervision, rehabilitation or liquidation of an insurance company and shall be instituted on the grounds contained in and conducted pursuant to <>sections 6<>, 46, 46A, 178, 179, 180 and 180A to 180L, inclusive, of chapter 175, except as provided in this section and may include, but not be limited to, the following: the health maintenance organization is insolvent or in unsound financial condition, the health maintenance organization's business policies or methods are unsound or improper, the health maintenance organization's condition or management is such as to render its further transaction of business hazardous to the public or to its members or creditors, the health maintenance organization is transacting business fraudulently, the health maintenance organization or its officers or agents have refused to submit an examination under section 10, the health maintenance organization has attempted or is attempting to compromise with its creditors on the ground that it is financially unable to pay its claims in full or the health maintenance organization has inadequately reserved for unearned premiums. Members shall have the same priority in the event of rehabilitation or liquidation as the law provides to policyholders of an insurer.
For the purpose of determining the priority of distribution of general assets, claims of members and members' beneficiaries shall have the same priority as established by section 180F of chapter 175 for policyholders, beneficiaries and insureds of insurance companies. If a member is liable to any provider for services provided pursuant to and covered by the health maintenance organization, that liability shall have the status of a member in the distribution of general assets.
Any provider who is obligated by statute or agreement to hold members harmless from liability for services provided pursuant to and covered by a health maintenance contract shall have a priority of distribution of the general assets immediately following that of members as described in this section.
Section 21. (a) For purposes of this section, "participating provider" shall mean any physician, hospital or other person who, under an express or implied contract with the health maintenance organization or with its contractor or subcontractor, has agreed to provide health care services to members with an expectation of receiving payment, other than co-payment, co-insurance or deductible, directly or indirectly from the health maintenance organization, its contractor or subcontractor.
(b) Every contract between a health maintenance organization and a participating provider shall be in writing and shall contain the following hold harmless provision:
The provider agrees that in no event, including but not limited to nonpayment by the health maintenance organization of amounts due the provider under this contract, insolvency of the health maintenance organization or any breach of this contract by the health maintenance organization, shall the provider or its assignees or subcontractors have a right to seek any type of payment from, bill, charge, collect a deposit from, or have any recourse against, the member, persons acting on the member's behalf, other than the health maintenance organization, the employer or the group health maintenance contract holder for services provided pursuant to this contract except for the payment of applicable co-payment, co-insurance or deductibles for services covered by the health maintenance organization. The requirements of this provision shall survive any termination of this contract for services rendered prior to the termination, regardless of the cause of such termination. The health maintenance organization's members, any persons acting on the member's behalf, other than the health maintenance organization, and the employer or group health maintenance contract-holder shall be third-party beneficiaries of this clause. This provision supercedes any oral or written agreement hereafter entered into between the provider and the member, persons acting on the member's behalf, other than the health maintenance organization, and the employer or group health maintenance contract holder.
(c) In the event that the participating provider contract has not been reduced to writing as required by subsection (b) or that the contract fails to contain the required hold harmless provision, such provision shall be deemed incorporated into such contract by operation of law.
(d) No participating provider, agent, trustee or assignee thereof, may maintain any action at law against a member to collect sums owed by the health maintenance organization.
Section 22. (a) For purposes of this section, "health care provider" shall mean any physician, hospital or other person furnishing health services who has provided such services to members under an express or implied contract or with an expectation of receiving payment, other than co-payment, deductible or co-insurance, directly or indirectly from the health maintenance organization.
(b) In addition to the provisions of section 21, in the event of the insolvency of a health maintenance organization:
(1) a member of a health maintenance organization shall not be liable to any health care provider for any covered health services provided to the member, except as provided in subsection (c);
(2) a health care provider or any representative of a health care provider may not collect or attempt to collect from a member money owed to the health care provider by a health maintenance organization;
(3) a health care provider or any representative of a health care provider may not maintain any action against a member to collect or attempt to collect any money owed to the health care provider by a health maintenance organization.
(c) Notwithstanding any other provision of this section, a health care provider or representative of a health care provider may collect or attempt to collect from a member:
(1) a co-payment, deductible, or co-insurance amounts owed by the member to the health care provider for covered services provided by the health care provider, or
(2) a payment or charges for services not covered under the member's health maintenance contract.
Section 23. (a) For purposes of this section, the following words shall, unless the context clearly requires otherwise, have the following meanings:-
"Carrier", a health maintenance organization authorized under this chapter, an insurance company authorized to provide accident and health insurance under chapter 175, a nonprofit hospital service corporation authorized under chapter 176A, a nonprofit medical service corporation authorized under chapter 176B, or any other entity responsible for the payment of benefits or provision of services under a group contract.
"Replacement", the benefits provided by a succeeding carrier.
"Discontinuance", the termination of the contract between the group contract holder and a health maintenance organization due to the insolvency of the health maintenance organization. The word "discontinuance" does not refer to the termination of any agreement between any individual enrollee and the health maintenance organization.
(b) (1) In the event of an insolvency of a health maintenance organization, upon order of the commissioner, all other carriers that participated in the enrollment process with the insolvent health maintenance organization at a group's last regular enrollment period shall offer such group's enrollees of the insolvent health maintenance organization a 30 day enrollment period commencing upon the date of insolvency. Each carrier shall offer such enrollees of the insolvent health maintenance organization the same coverages and rates that it had offered to the enrollees of the group at its last regular enrollment period. Nothing in this section shall prevent an employer from making alternative arrangements with any carrier to provide coverage to its employees who were members of the insolvent health maintenance organization.
(2) If no other carrier had been offered to some groups whose members were enrolled in the insolvent health maintenance organization, or if the employer does not arrange for alternative coverage, or if the commissioner determines that the other carriers lack sufficient health care delivery resources to assure that health care services will be available and accessible to all of the group's enrollees of the insolvent health maintenance organization, then the commissioner shall allocate equitably the insolvent health maintenance organization's group contracts for such groups among all health maintenance organizations that operate within a portion of the insolvent health maintenance organization's service area, taking into consideration the health care delivery resources of each health maintenance organization. Each health maintenance organization to which a group or groups are so allocated shall offer such group or groups the health maintenance organization's existing coverage which is most similar to each group's coverage with the insolvent health maintenance organization at rates determined in accordance with the succeeding health maintenance organization's existing rating methodology.
(3) The commissioner shall also allocate equitably the insolvent health maintenance organization's nongroup enrollees who are unable to obtain other comparable coverage among all health maintenance organizations that operate within a portion of the insolvent health maintenance organization's service area, taking into consideration the health care delivery resources of each such health maintenance organization. Each health maintenance organization to which nongroup enrollees are allocated shall offer such nongroup enrollees the health maintenance organization's existing coverage for individual or conversion coverage as determined by his type of coverage in the insolvent health maintenance organization at rates determined in accordance with the succeeding health maintenance organization's existing rating methodology. Succeeding health maintenance organizations that do not offer direct nongroup enrollment may aggregate all of the allocated nongroup enrollees into one group for rating and coverage purposes.
(c) (1) Any carrier providing replacement coverage with respect to group hospital, medical or surgical expense or service benefits within 60 days from the date of discontinuance of a prior health maintenance organization contract or policy providing such hospital, medical or surgical expense or service benefits shall immediately cover all enrollees who were validly covered under the previous health maintenance organization contract or policy at the date of discontinuance and who would otherwise be eligible for coverage under the succeeding carrier's contract, regardless of any provisions of the contract relating to active employment or hospital confinement or pregnancy.
(2) Except to the extent benefits for the condition would have been reduced or excluded under the prior carrier's contract or policy, no provision in a succeeding carrier's contract of replacement coverage that would operate to reduce or exclude benefits on the basis that the condition giving rise to benefits preexisted the effective date of the succeeding carrier's contract shall be applied with respect to those enrollees validly covered under the prior carrier's contract or policy on the date of discontinuance.