Pennsylvania Code › Title 31 - INSURANCE › Part X - Health Maintenance Organization › Chapter 301 - HEALTH MAINTENANCE ORGANIZATION › Subchapter C - APPLICATION FOR CERTIFICATION OF AUTHORITY › Section 301.42 - Content of application for certificate of authority

Current through Register Vol. 54, No. 28, July 13, 2024
An application for a certificate of authority under the act
					 shall be made in writing in triplicate to the Commissioner. The application
					 shall contain the following information:
(1) A copy of the basic organizational
				  documents of the applicant organization, such as the articles of incorporation
				  and amendments thereto.
(2) A copy
				  of the bylaws, rules and regulations or similar documents governing the conduct
				  of the internal affairs of the applicant corporation.
(3) A list of the names, addresses and
				  official positions of the members of the Board of Directors of the applicant
				  corporation and of persons who are to be responsible for the conduct of the
				  affairs of the applicant. The list shall include the Executive Director or
				  President, Medical Director, Director of Marketing and Director of Finance, and
				  notarized biographical forms for each.
(4) A description of the service area of the
				  proposed HMO, including geographic boundaries, demographic data and
				  identification of population groups which would be sources of
				  prepayment.
(5) Copies of the
				  applicant corporation's proposed contracts with subscribers and groups of
				  subscribers, including evidence of coverage forms, setting forth the
				  corporation's contractual obligations to provide basic health
				  services.
(6) Copies of the
				  applicant corporation's proposed contracts with physicians, groups of
				  physicians organized on a group-practice or individual-practice basis,
				  hospitals, skilled nursing facilities and other providers of health care
				  services enabling it to provide health services to a voluntarily enrolled
				  population.
(7) Copies of a
				  proposed contract with an individual, partnership, association or corporation
				  for the performance on its behalf of necessary functions, including marketing,
				  enrollment and administration of a contract with an insurance company, hospital
				  plan corporation or professional health service corporation for the provision
				  of insurance, indemnity or reimbursement against the cost of health care
				  services provided by the HMO.
(8) A
				  detailed description of the applicant corporation's proposed grievance
				  resolution system whereby the complaints of its members may be acted upon
				  promptly and fairly.
(9) A copy of
				  the applicant corporation's proposed premium rates and a detailed description
				  of the underlying assumptions utilized in deriving rates, which shall be
				  submitted separate from the remainder of the application for certificate of
				  authority. The actuarial methodology used in deriving premium rates may not be
				  considered public information. The detailed description of the underlying
				  assumptions used in deriving rates shall include:
(i) Projected hospital and skilled nursing
				  facility inpatient utilization in days per 1,000 members per year, subdivided
				  by age or sex.
(ii) Projected
				  hospital costs attributable to hospitals to be specifically utilized by the HMO
				  through contract or otherwise.
(iii) Projected outpatient and same day
				  hospital utilization in services per 1,000 members per year, subdivided by age
				  or sex, as applicable.
(iv)
				  Projected outpatient and same day hospital costs attributable to hospitals to
				  be utilized by the HMO by contract or otherwise.
(v) Projected utilization of various
				  physician services, such as primary office, inpatient and surgical, expressed
				  in terms of number of visits per 1,000 members per year, subdivided by age or
				  sex.
(vi) Projected cost of
				  physicians' services, expressed in terms of cost per visit or per
				  service.
(vii) Identification of
				  physician services that are included in primary care capitation, if applicable.
				  If there is a specialist capitation, services shall be identified.
(viii) Projected cost of emergency and
				  out-of-area services of non-HMO providers, differentiated as to hospital and
				  medical service components.
(ix)
				  Projected cost and utilization of other services, such as prescription drug,
				  home health, eye or ear exams, mental health, substance abuse and medical
				  equipment.
(x) Identification of
				  copays, if any, and their effect on rates.
(xi) Identification of incentive arrangements
				  and risk pool arrangements in provider agreements, and their effect on rates.
				  The categories of provider services covered by the arrangements shall be
				  identified.
(xii) Identification,
				  justification and derivation of a separate trend factor. For each separate
				  trend factor, the specific benefits to which the trend factor applies shall be
				  identified.
(xiii) Identification
				  and justification of reserve or surplus contribution factors.
(xiv) Identification and justification of
				  profit factor.
(xv) Projected cost
				  of reinsurance.
(xvi) Projected
				  amount of investment income.
(xvii)
				  A detailed breakdown of administration expenses into component parts including
				  management fees.
(xviii)
				  Identification of demographic information used to convert the total cost per
				  member per month to the proposed premium rates.
(xix) Identification and derivation of large
				  group rate adjustment formulas.
(xx) A rate table listing proposed premium
				  rates by effective period, class of membership and applicable contract form
				  number which is separate from the rate justification materials.
(xxi) Projected financial statements,
				  including schedules of cash flow, for a number of years that go at least past
				  the breakeven point. Assumptions underlying the financial statements, including
				  the projected number of members, shall be included.