2023 New York Laws › PBH - Public Health › Article 44 - Health Maintenance Organizations › 4406 - Health Maintenance Organizations; Regulation of Contracts.

§ 4406. Health maintenance organizations; regulation of contracts.  1.
The  contract  between a health maintenance organization and an enrollee
shall be subject to regulation by the superintendent as  if  it  were  a
health  insurance  subscriber  contract,  and  shall include, but not be
limited to, all mandated benefits required by article forty-three of the
insurance law. Such contract shall fully and clearly state the  benefits
and  limitations  therein  provided  or  imposed,  so  as  to facilitate
understanding and comparisons, and to exclude provisions  which  may  be
misleading  or  unreasonably confusing. Such contract shall be issued to
any individual and dependents of such individual and any  group  of  one
hundred  or  fewer  employees  or  members,  exclusive  of  spouses  and
dependents, or to  any  employee  or  member  of  the  group,  including
dependents,  applying for such contract at any time throughout the year.
An individual direct payment contract shall be issued only in accordance
with section four thousand three hundred twenty-eight of  the  insurance
law.  The  superintendent  may, after giving consideration to the public
interest, exempt a health maintenance organization from the requirements
of  this  section  provided  that  another  health  insurer  or   health
maintenance  organization  within  the health maintenance organization's
same holding company system,  as  defined  in  article  fifteen  of  the
insurance law, including a health maintenance organization operated as a
line  of business of a health service corporation licensed under article
forty-three of the insurance law, offers coverage that,  at  a  minimum,
complies  with this section and provides all of the consumer protections
required to be provided by a health maintenance organization pursuant to
this chapter  and  regulations,  including  those  consumer  protections
contained in sections four thousand four hundred three and four thousand
four  hundred  eight-a of this chapter. The requirements shall not apply
to a health maintenance  organization  exclusively  serving  individuals
enrolled pursuant to title eleven of article five of the social services
law,  title  eleven-D  of article five of the social services law, title
one-A of article twenty-five of this chapter or title  eighteen  of  the
federal  Social  Security  Act,  and, further provided, that such health
maintenance  organization  shall  not  discontinue  a  contract  for  an
individual  receiving  comprehensive-type  coverage  in  effect prior to
January first, two thousand four who is ineligible to purchase  policies
offered  after  such  date  pursuant  to  this  section  or section four
thousand three hundred twenty-eight of the  insurance  law  due  to  the
provision  of  42  U.S.C.  1395ss  in effect prior to January first, two
thousand four.
2.  (a)  Upon  approval  of  the  commissioner,  an  organization  may
implement  an  out-of-plan  benefits system that allows enrollees to use
providers  not  participating  in  the  plan  pursuant  to  a  contract,
employment  or other association. The commissioner, in consultation with
the superintendent, shall not approve an organization  to  implement  an
out-of-plan benefits system unless the organization demonstrates that:
(i)  the  requirements of this article and any regulations promulgated
thereunder have been met and will continue to be met;
(ii) it can establish and maintain a contingent reserve  fund  of  not
less  than two percent of the entire net premium income for the calendar
year of the organization in addition to  any  other  contingent  reserve
fund required by the commissioner in regulations subject to the approval
of the superintendent; and
(iii)  it  has established mechanisms to ensure and monitor compliance
with the provisions of paragraph (b) of this subdivision.
(b) Except as provided  in  paragraph  (c)  of  this  subdivision,  an
organization  may  not  permit  the  benefits  provided pursuant to such
out-of-plan system to exceed  ten  percent  of  the  total  health  care

expenditures  of  the  organization, as determined on a quarterly basis,
but such  limitation  shall  not  apply  to  individual  direct  payment
contracts  issued  pursuant to section forty-three hundred twenty-two of
the  insurance  law.  In  determining the amount of benefits provided in
connection with the use of such providers,  an  organization  shall  not
include benefits provided pursuant to a referral made by a participating
provider or benefits provided in emergency situations.
(c)  An  organization  may  exceed  the ten percent level by up to two
percent in any given quarter provided that  the  organization  does  not
exceed the ten percent level by the end of the following quarter.
(d)  If the commissioner determines that an organization has permitted
the benefits provided pursuant to an out-of-plan system  to  exceed  ten
percent,   except   as  permitted  by  paragraph  (b)  or  (c)  of  this
subdivision,  the  commissioner  may,  where  appropriate,   assess   an
organization  a  civil  penalty  not  to exceed the amount determined by
multiplying the percentage permitted in excess of  ten  percent  by  the
amount, in dollars, of the difference between what the organization paid
all  inpatient  hospitals for such year and the amount such organization
would have paid such hospitals had it been a payor within the categories
specified in paragraph (b) of subdivision one  of  section  twenty-eight
hundred seven-c of this chapter and not authorized to negotiate hospital
rates.  The  commissioner,  in consultation with the superintendent, may
revoke, suspend or limit an approval issued pursuant to this subdivision
for non-compliance by the organization with any  of  the  provisions  of
this article or the rules and regulations promulgated thereunder.
(e)   The   indemnification   of   enrollees  of  the  services  of  a
non-participating provider may be  subject  to  deductibles,  copayments
and/or coinsurance approved by the superintendent.
(f)  Nothing  in  this  subdivision  shall  be  construed  to limit an
organization's ability to manage the care of enrollees or the  types  of
health  services  covered,  to  conduct  utilization  review  of quality
assurance activities.
(g) The commissioner may prohibit an organization determined  to  have
an  inadequate  network  of  participating providers from permitting new
elections pursuant to this subdivision as of the date of notification of
such determination by the  commissioner.  Notification  of  such  action
shall be given by the organization to each enrollee.
(h)  An organization providing comprehensive health services under one
or more assumed names shall be deemed to be offering its plan through  a
line   of   business   corresponding  to  each  such  assumed  name.  An
organization may, pursuant to the provisions of this subdivision, permit
enrollees of one or more lines of business to elect to receive  services
from  providers  not  participating  in  such  line or lines of business
provided, however, that with respect  to  each  line  of  business  such
elections  shall  be permitted only to the extent authorized pursuant to
paragraphs (b) and (c) of this subdivision.
(i) Nothing herein shall be deemed to prohibit  a  health  maintenance
organization  from  offering  services  in  connection  with  a  company
appropriately licensed pursuant to the insurance law.
3. (a) No contract issued pursuant to this section shall provide  that
services  of  a participating hospital will be covered as out-of-network
services solely on the basis that the health care provider admitting  or
rendering services to the enrollee is not a participating provider.
(b)  No  contract  issued  pursuant to this section shall provide that
services of a participating health care  provider  will  be  covered  as
out-of-network  services  solely  on  the  basis  that  the services are
rendered in a non-participating hospital.
(c) For purposes of this subdivision, a "health care  provider"  is  a
health  care  professional licensed, registered or certified pursuant to
title  eight  of  the  education  law  or  a  health  care  professional
comparably licensed, registered or certified by another state.
4.  Nothing  in  this  section  shall be construed to require a health
maintenance organization in its  provision  of  a  comprehensive  health
services plan to meet the requirements of an insurer under the insurance
law.
5.  If  an  enrollee  requires  nursing  facility  placement  and is a
resident of a continuing  care  retirement  community  authorized  under
article   forty-six   of  this  chapter,  the  enrollee's  primary  care
practitioner  must  refer  the  enrollee  to  that  community's  nursing
facility  if  medically  appropriate;  if  the  facility  agrees  to  be
reimbursed  at  the  health  maintenance  organization's  contract  rate
negotiated  with similar providers for similar services and supplies, or
negotiates a mutually agreed upon rate; and if the  facility  meets  the
health  maintenance  organization's  guidelines  and  standards  for the
delivery of medical services.