New York Codes, Rules and Regulations › Title 10 - DEPARTMENT OF HEALTH › Chapter II - Administrative Rules and Regulations › Subchapter R - Health Maintenance Organizations › Part 98 - Health Maintenance Organizations › Subpart 98-1 - Managed Care Organizations › Section 98-1.5 - Application for a certificate of authority

Current through Register Vol. 46, No. 28, July 10, 2024
(a) No person shall establish or operate an
					 MCO or otherwise hold itself out as an MCO in this State unless it has complied
					 with article 44 of the Public Health Law and this Subpart. However, an
					 applicant may file a certificate of incorporation, articles of organization or
					 amendment thereto, in accordance with section
					 98-1.4 
					 of this Subpart without violating this subdivision. Except for operating or
					 approved MLTC demonstrations, no person shall initiate enrollment of
					 individuals or deliver prepaid comprehensive health services until it has
					 received a certificate of authority from the commissioner. A foreign
					 corporation or limited liability company shall not be a proper applicant for a
					 certificate of authority. A corporation licensed under the provisions of
					 article 43 of the Insurance Law, which is also certified pursuant to article 44
					 of the Public Health Law as an HMO to offer a comprehensive health benefit
					 package, shall designate its health maintenance organization as a separate line
					 of business. In the case of such a separate line of business, separate
					 accounting records shall be maintained and separate HMO reporting forms shall
					 be filed with the superintendent and commissioner.
(b) In order to obtain a certificate of
					 authority to operate an MCO, a person shall file an application on forms
					 prescribed by the commissioner. The application shall be signed by the chief
					 executive officer duly authorized by the board of a corporate applicant, a
					 general partner or owner of a proprietary applicant, or the president, the
					 chairman of the board or chief executive officer of a public applicant, or an
					 authorized representative of the applicant. An original and seven copies of the
					 application shall be filed and shall set forth or be accompanied by the
					 following, except that in the case of a PCPCP, the application shall include
					 the information as specified herein and the information prescribed by section 4403-e  of the Public Health Law:
(1) copies of the basic organizational
					 documents of the applicant, e.g., the certificate of incorporation, bylaws,
					 articles of organization, partnership agreement, trust agreement, operating
					 agreement or other applicable documents and agreements, and all amendments
					 thereto;
(2)
(i) a list of the names, addresses and
					 official positions of the members of the board of directors, members or
					 managers of a limited liability company, officers, controlling persons, owners
					 or partners and medical director of the proposed MCO, and if the applicant will
					 be a controlled MCO, the same information for the holding company;
(ii) the applicant shall provide written
					 acknowledgment that, once certified, the MCO will provide written notice to DOH
					 immediately upon:
(a) the departure,
					 resignation or termination of any officer, member of the board, member or
					 manager of a limited liability company or the medical director, together with
					 the identity of the individual; and
(b) the hiring of an individual to replace an
					 individual concerning whom notice is required under clause (a) of this
					 subparagraph, together with the identity of the individual hired;
(3) copies of the same
					 financial and personal disclosure information required by the department for
					 the members of the board, officers, controlling persons, owners, partners and
					 medical director of the proposed MCO as set forth in subparagraphs (ii) and
					 (iii) of this paragraph.
(i) The applicant
					 shall be responsible for obtaining from the appropriate licensing authorities
					 the information necessary for the determination by the commissioner of
					 character, competence and performance when information adequate to make such
					 determination is not available to the commissioner in the records of the
					 department.
(ii) Disclosure
					 information shall include, but not be limited to: a list of health care
					 entities owned or operated by the applicant, its holding company or other
					 persons in the holding company system or with which an officer, member of the
					 board, member or manager of a limited liability company, controlling person,
					 owner, partner or medical director has been affiliated; the address of each
					 such entity; the dates of ownership or operation of each such entity; and
					 documentation from the appropriate licensing and regulatory authorities
					 indicating that those health care entities are in substantial compliance with
					 applicable laws and regulations.
(iii) In the event that any such health care
					 entity specified in subparagraph (ii) of this paragraph, while under the
					 control or operation of the applicant, its holding company or other persons in
					 the holding company system or with which an officer, member of the board,
					 member or manager of a limited liability company, controlling person, partner,
					 owner or medical director has been affiliated, has been subjected to financial
					 penalties or suspension or revocation of its operating certificate or license
					 because of failure to comply with provisions governing the conduct and
					 operation of the facility, then information must be provided that describes the
					 nature of the violation, the agency or body enforcing the violation (including
					 its name and address), the steps taken by the facility to remedy the violation,
					 and an indication of whether the suspension, revocation or accreditation has
					 since been restored;
(4)
					 except for PCPCPs, statements of the current financial condition of the
					 applicant and any holding company, including:
(i) a balance sheet and a detailed financial
					 plan covering not less than three years' projected operation of the MCOs,
					 demonstrating the basis upon which the plan will become self-supporting and
					 repay indebtedness and specifying the methods and arrangements for assurance
					 and protection of the MCO's solvency, including complying with required
					 reserves and deposits;
(ii) any
					 insurance policies; and
(iii) a
					 plan for enrollee protection and payment of incurred costs of services in the
					 event of insolvency. For purposes of demonstrating compliance with required
					 reserves and deposits prior to commencing operations, the MCO must determine
					 such reserve and deposit based on section
					 98-1.11(e)
					 and (f)  of this Subpart using projected net
					 premium income and estimated expenditures for the first calendar year as
					 indicated in the detailed financial plan described in subparagraph (i) of this
					 paragraph;
(5) if the
					 applicant intends to contract with a management contractor to manage the
					 proposed MCO, information specified in section
					 98-1.11(i)-(r) 
					 of this Subpart shall be required as part of the application;
(6) a copy of any proposed contract or form
					 of contract, and all attachments thereto, to be made between or among hospitals
					 and any other type of providers of covered services and the proposed MCO.
(i) Such contract should specify any
					 risk-sharing arrangements between the proposed MCO and the provider.
(ii) Such contract shall include express
					 provisions indicating that the provider shall hold MCO enrollees harmless from
					 liability, and shall not bill enrollees under any circumstances for the costs
					 of covered services rendered by the contracting provider, except that nothing
					 herein shall prevent collection of applicable co-payments or co-insurance or
					 permitted deductibles.
(iii) Such
					 contact shall include provisions allowing access by the MCO and participating
					 IPAs, as necessary, to the medical records of all health care providers serving
					 the MCO's enrollees provided the consent of the enrollee is first obtained
					 either at the time of initial enrollment or initial visit with a participating
					 provider.
(iv) Such contact shall
					 include provision which require prior approval by the commissioner of any
					 material changes in contracts between the MCO and health services providers.
					 Proposed material changes shall be submitted to the commissioner in advance of
					 their implementation in accordance with guidelines issued by the commissioner
					 as per subparagraph (v) of this paragraph.
(v) The commissioner may issue guidelines, in
					 consultation with regulated parties, with respect to the process for contract
					 review and required contract provisions, and to effectuate the provisions of
					 this Subpart.
(vi) Prior to
					 approval of the certificate of authority, a photocopy of each of the executed
					 contracts with hospitals, a photocopy of one executed contract with each type
					 of provider for approval as to form and content, and a sworn list in affidavit
					 form of all providers with whom contracts have been executed must be submitted
					 by the proposed MCO.
(vii) An MCO
					 shall not enter into a contract with a not-for-profit or business corporation,
					 limited liability company or professional services limited liability company
					 which proposes to provide the services of an (IPA) unless:
(a) the certificate of incorporation or
					 articles of organization of the IPA, which shall include "independent practice
					 association" or "IPA" within the IPA name, contains powers and purposes
					 permitting the arranging by contract for the delivery or provision of health
					 services by individuals, entities and facilities licensed or certified to
					 practice medicine and other health professions, and, as appropriate, ancillary
					 medical services and equipment, by which arrangements such health care
					 providers and suppliers will provide their services in accordance with and for
					 such compensation as may be established by a contract between the IPA and one
					 or more MCOs which have been granted a certificate of authority pursuant to the
					 provisions of article 44 of the Public Health Law of the State of New York, as
					 amended;
(b) the IPA certificate of
					 incorporation or articles of organization contain(s) the following provision:
					 notwithstanding any other provision herein to the contrary, nothing contained
					 herein shall authorize the corporation, limited liability company or
					 professional services limited liability company to establish, operate,
					 construct, lease or maintain a hospital or to provide hospital services or
					 health-related services or to operate a certified home health agency, a
					 hospice, or an MCO, or to provide a comprehensive health services plan as
					 defined and covered by articles 28, 36, 40 and 44, respectively, of the Public
					 Health Law, or to solicit, collect or otherwise raise or obtain any funds,
					 contributions or grants from any source for the establishment or operation of
					 any hospital or to establish, operate, construct, lease or maintain an adult
					 care facility as provided by article 7 of the Social Services Law, or to
					 solicit, collect or otherwise raise or obtain any funds, contributions or
					 grants from any source for any such purposes; and
(c) any general powers and purposes contained
					 in the certificate of incorporation or articles of organization, as authorized
					 by section 202 of either the Business Corporation Law, the Not-for-Profit
					 Corporation Law or the Limited Liability Company Law, are by express provision
					 in the certificate of incorporation or articles of organization to be exercised
					 only as powers and purposes incidental to accomplishing the primary IPA powers
					 and purposes of the corporation or limited liability company; and
(d) the IPA's certificate of incorporation or
					 articles of organization has been reviewed by the Education and Insurance
					 Departments and the commissioner, have been filed with the Secretary of State
					 and, when presented for filing, had annexed thereto the waiver, approval or
					 consent of the Education and Insurance Departments and the
					 commissioner;
(e) An IPA may, as
					 incidental to its primary IPA powers and purposes:
(1) share risk for the provision of medical
					 services with authorized MCOs and subcapitate or otherwise compensate providers
					 and IPAs with which it has contracted, provided, however, that with respect to
					 each proposed risk sharing contract, the IPA has demonstrated to the
					 commissioner and/or, when applicable, the superintendent, that it is
					 financially responsible and capable of assuming such risk and has satisfactory
					 insurance, stop-loss, reserves or other arrangements so that it may be expected
					 to satisfy its obligations to MCOs, providers and enrollees;
(2) enter into management contracts with MCOs
					 to perform management functions permitted to be delegated by this Subpart or
					 guidelines issued by the commissioner from time to time, subject to the prior
					 written approval of any such contract by the commissioner pursuant to section
					 98-1.11 
					 of this Subpart; provided, however, that the standards applied by the IPA in
					 performing such delegated functions shall be approved in writing by the
					 delegating MCO as being substantially similar to those applied by the MCO
					 directly and/or pursuant to delegation to the MCO's enrollee population as a
					 whole. IPAs performing management functions pursuant to management contracts
					 with MCOs, as authorized by this paragraph, shall comply with all statutory and
					 regulatory requirements, including registration as a utilization review agent,
					 and timeframes applicable to the responsibilities delegated and activities
					 being managed;
(3) contract with
					 other individuals and entities to obtain technical and administrative services;
					 provided, however, that an IPA may not through contract or any other
					 arrangement, delegate to any person authority to exercise the governing
					 authority and responsibilities of the IPA, nor may it delegate, through
					 assignment or otherwise, any IPA authority or responsibility acquired pursuant
					 to a management agreement with an MCO in accordance with this Subpart to any
					 person unless the parties have received the prior approvals of the commissioner
					 and the delegating MCO as required by statute or this Subpart;
(4) contract with other IPAs in order that
					 providers under contact with such other IPA may be made available to the MCOs
					 and/or workers' compensation preferred provider organizations for which the
					 contracting IPA arranges for the delivery of services; and
(5) have access to enrollee medical records
					 to the extent necessary to perform management functions pursuant to a
					 management contract with an MCO in accordance with this Subpart and pursuant to
					 article 44 of the Public Health Law and guidelines issued by the commissioner,
					 subject to applicable State and Federal requirements concerning the
					 confidentiality of records, including those involving HIV and alcohol and
					 substance abuse services;
(f) An IPA, in addition to the powers and
					 purposes allowed under this Part, may seek certification as an Accountable Care
					 Organization ("ACO") pursuant to article 29-E of the Public Health Law and Part
					 1003 of this Title. An IPA certified as an ACO shall comply with all the
					 requirements of Part 1003, including but not limited to the requirements of
					 section
					 1003.6(e) and
					 (g). Upon receiving such certification, an
					 IPA acting as an ACO may contract with the entities listed in section
					 1003.2(x) 
					 of this title.
(g) An IPA, in
					 addition to the powers and purposes allowed under this Part, may include any
					 and all necessary powers and purposes as authorized, allowed, or required under
					 an approved Delivery System Reform Incentive Payment ("DSRIP") Program project
					 pursuant to New York's Partnership Plan section 1115(a) Medicaid Demonstration
					 extension, as amended April 14, 2014.
(7) a copy of any proposed contract to be
					 made with a licensed insurer or accredited reinsurer, for the purpose of
					 insuring or reinsuring for individual catastrophic costs or out-of-area
					 emergency care, if applicable. Prior to approval of the certificate of
					 authority, photocopies of the executed contracts must be submitted to the
					 commissioner and superintendent;
(8) draft copies of individual enrollee
					 contracts and group contracts that are to be entered into with employers,
					 unions, trustees or other organizations, if applicable. Prior to approval of
					 the certificate of authority, the final contracts must be submitted to the
					 commissioner and, if applicable, superintendent;
(9) identification of the type of MCO that is
					 proposed and a description of the service delivery system of the proposed MCO,
					 including the location of primary care providers and, if applicable, providers
					 of other services such as ambulatory, ancillary and hospital
					 services;
(10) a description of the
					 staff for the proposed MCO, including the functional titles of staff. The
					 number and type of staff that will be hired should relate to projections of
					 utilization. Except for PCPCPs, the applicant should discuss the basis on which
					 providers and services have been developed to meet the needs of the projected
					 enrolled population initially and up to the break-even point of operation. The
					 PCPCP applicant should discuss the basis on which providers have been developed
					 to meet the needs of the projected enrolled population;
(11) a description of the population to be
					 enrolled, including projections of enrollment on a monthly basis until the
					 break-even point, or for PCPCPs, a description of the population to be
					 enrolled, including projections of enrollment on a monthly basis for the first
					 three years of operations;
(12) a
					 description of the proposed service area, including a description of access to
					 services as it relates to existing transportation modes;
(13) a description of the benefit package,
					 including a description of copayments, if applicable;
(14) a description of the marketing plan,
					 including all draft marketing materials;
(15) a detailed description of the enrollee
					 grievance and appeal system and complaint procedures to be utilized;
(16) a description of the quality assurance
					 program and the quality assessment and performance improvement plan to be
					 implemented;
(17) a description of
					 the data management information system;
(18) the applicant's proposed rates of
					 payment for enrollees, including the basis and manner of calculating those
					 rates. Except for the MCO in-network component of a large group
					 point-of-service (POS) product of MCOs, which may be experience rated
					 consistent with the formula used in rating the out-of-network component of the
					 POS product and in accordance with section 4308 (b)  of the Insurance
					 Law, such proposed rate shall be consistent with the principles of community
					 rating. For PCPCPs, such information shall be provided upon request by the
					 commissioner;
(19) for HMO
					 applicants, demonstration of a willingness to provide community services that
					 include at least the following: a willingness to enter into a contract with the
					 local social services district to enroll and serve individuals eligible for
					 benefits under title XIX, including the steps and a time frame for entering
					 into such contract; a willingness to provide coverage to Medicare
					 beneficiaries; and demonstration that the HMO offers open enrollment pursuant
					 to articles 32 and 43 of the Insurance Law, including steps and a time frame
					 for offering such coverage. For the purpose of this section, open enrollment
					 shall mean offering enrollment throughout the year to groups consisting of two
					 or more eligible members who elect to enroll, subject to such reasonable
					 limitations as an affiliation or waiting period not to exceed two months from
					 the date of the enrollee's application until the commencement of coverage,
					 provided that coverage may not be excluded based upon a preexisting condition
					 for groups of more than 50; and
(20) such other and additional information as
					 the commissioner may require to make the determinations required in sections 4403, 4403-a, 4403-c, 4403-e, 4403-f and
					 4408-a  of the Public Health Law.
					 Additional information must be provided within 30 days of the date of a
					 request. The applicant may request from the commissioner an extension beyond
					 the 30-day period, the granting of which may be made by the commissioner upon a
					 finding that an extension is justified by the public interest. Failure to
					 provide such additional information within the time prescribed or as extended
					 by the commissioner shall constitute a withdrawal of the
					 application.