Pennsylvania Code › Title 31 - INSURANCE › Part X - Health Maintenance Organization › Chapter 301 - HEALTH MAINTENANCE ORGANIZATION › Subchapter I - CONTRACTUAL ARRANGEMENTS BETWEEN HMOs AND IDSs-STATEMENT OF POLICY › CONTRACT FILINGS AND OTHER REPORTING › Section 301.314 - Department review

Current through Register Vol. 54, No. 28, July 13, 2024
(a) The
					 Department may review the HMO materials filed, to examine the transference of
					 risk and other matters that may affect the financial condition of the
					 HMO.
(b) In evaluating the
					 financial condition of an HMO, the Department will ascertain whether one or
					 more of the following are present in an IDS contract:
(1) An appropriate provision similar to the
					 hold harmless provision described in §
												301.122 (relating to hold
					 harmless), prohibiting the IDS and participating providers from billing HMO
					 members.
(2) A provision for the
					 maintenance of books, accounts and records by the IDS to assure that
					 transactions, including the risk transfer, are clearly, accurately and
					 completely disclosed.
(3)
					 Appropriate terms permitting the HMO to assure itself of the financial
					 viability and condition of the IDS throughout the term of the contract. These
					 terms might include one or more of the following:
(i) A provision authorizing the HMO to access
					 the IDS's books, accounts and records upon terms and conditions as the HMO and
					 the IDS may agree.
(ii) A provision
					 requiring that the IDS secure an audited financial statement on at least an
					 annual basis and that the HMO receive the audited statement on an annual basis
					 and interim unaudited financial statements from the IDS on a regular and
					 ongoing basis.
(iii) A provision
					 authorizing the HMO to receive information regarding the IDS's reserves so that
					 the HMO may adequately evaluate its reserves.
(iv) A provision for the IDS to post a letter
					 of credit or other acceptable financial security, in a reasonable amount as
					 agreed upon between the HMO and IDS.
(v) A provision establishing a withholding of
					 the fee in a reasonable amount as agreed upon between the HMO and IDS and which
					 may be returned to the IDS under the terms of the contract.
(vi) A provision for the IDS to carry general
					 liability insurance and for participating providers to carry professional
					 liability insurance in an amount and from a carrier mutually acceptable to the
					 HMO and the IDS.
(vii) A provision
					 for the IDS to secure a surety bond to cover the IDS's performance under the
					 contract.
(viii) A provision for
					 the IDS to secure excess of loss insurance in an amount and from a carrier
					 mutually acceptable to the HMO and the IDS.
(4) A provision prohibiting the assignment of
					 any rights or obligations under the contract in the absence of the consent of
					 the HMO.
(5) A provision granting
					 the HMO the right to be advised of, and the right to object to, any
					 subcontractor of the IDS with respect to services required to be performed by
					 the IDS under the contract with the HMO.
(6) Appropriate provisions for the
					 termination of the contract, including consideration of whether the HMO has the
					 right to immediately terminate the contract upon a valid order issued by the
					 Commissioner or other lawful authority.
(7) A provision setting forth the
					 circumstances under which the HMO may institute an appropriate financial
					 monitoring plan of the IDS.
(8) A
					 provision requiring that the IDS carry appropriate insurance coverage, such as
					 fidelity bonds covering IDS employes who handle HMO funds and workers'
					 compensation insurance.
(9) A
					 provision requiring that the IDS timely advise the HMO of relevant matters that
					 may have a material effect on the IDS's ability to perform under the contract,
					 including, for example, the following:
(i)
					 Whether the IDS or a participating provider is subject to an administrative
					 order, cease and desist order, fine or license suspension.
(ii) Whether legal action has been taken
					 which may have a material effect on the IDS's financial condition or the IDS's
					 ability to perform under the contract.