West Virginia Code of State Rules › Agency 114 - Insurance Commission › Title 114 - LEGISLATIVE RULE INSURANCE COMMISSIONER › Series 114-46 - Filing Procedures For Health Maintenance Organizations › Section 114-46-2 - Application for Certificate of Authority

Current through Register Vol. XLI, No. 28, July 12, 2024
2.1.
				Each application for a certificate of authority submitted by a health maintenance
				organization shall be in the format described on a form provided by the Insurance
				Commissioner.
2.2. Each application
				shall be verified by an officer or authorized representative of the
				applicant.
2.3. Each application shall
				set forth or be accompanied by:
a. The applicant's
				name; trade name, if any; address and telephone number; name, address and telephone
				number of attorney or principal filing the application;
b. A copy of the applicant's basic organizational
				document, and any amendments, stamped with the date of filing, together with:
A. An original certificate issued by the Secretary
				of State of the state under whose laws the applicant is organized, certifying that
				the attached organizational document is a true and correct copy of the original
				filed in the Secretary of State's office;
B. A copy of the stock certificate(s) issued by
				the applicant, together with a listing of capital (par value per share) and surplus
				(per share contribution in excess of par value); and
C. A description of the applicant's legal history
				in chronological order, including predecessor corporations or organizations,
				mergers, reorganizations and changes of ownership, the dates thereof and the parties
				involved;
c. The applicant's
				bylaws, rules, regulations or similar form of document regulating the conduct of the
				applicant's affairs;
d. A list of the
				names, addresses and official positions of all persons responsible for the conduct
				of the applicant's affairs, including all officers, members of the applicant's board
				of directors or other governing body and persons owning five percent (5%) or more of
				the applicant. The list shall contain:
A. A full
				disclosure of any financial interest in the health maintenance organization held by
(a). any officer or member of the governing
				body;
(b). any provider, as defined in
				W. Va. Code '33-25A-2(18);
				or
(c). any organization or corporation
				owned or controlled by an officer or member of the governing body or by a
				provider;
B. A full
				disclosure, by any person owning five percent (5%) or more of the applicant, of the
				extent of that person's ownership interest in all parent organizations, subsidiaries
				and affiliated organizations of the applicant, together with an organizational chart
				depicting all levels of ownership of the applicant and its parent organizations,
				subsidiaries and affiliated organizations;
C. The extent and nature of any contract or
				financial arrangements between an officer or member of the governing body or a
				provider and the health maintenance organization;
D. A completed "Biographical Statement and
				Affidavit" on a form provided by the Insurance Commissioner, for each officer,
				director, manager and administrator of the applicant, including, but not limited to,
				the applicant's executive director, medical director, finance director and marketing
				director, and for each person owning five percent (5%) or more of the applicant;
				and
E. An independent investigation
				report on each individual reported under paragraph D of this subdivision must be
				submitted by an independent investigator, which has been approved in writing by the
				Insurance Commissioner, directly to:
Financial Conditions Division
West Virginia Insurance Commissioner
P.O. Box 50540
Charleston WV 25305-0540;
e. A description of the applicant, including:
A. Whether it is or will be organized for profit
				or not for profit;
B. Whether it is or
				will be a "staff model", "individual practice arrangement model" or "combination
				model" health maintenance organization;
C. The method of compensation (fee for service,
				capitated basis, etc.) for providers; and
D. A statement describing the service area or
				areas and the type or types of enrollees to be served by the applicant;
f. A copy of contract forms used by the
				applicant, including:
A. Each health maintenance
				contract form, including but not limited to contracts with affiliates,
				administrative contracts and external service contracts;
B. Each evidence of coverage form;
C. Member handbook(s) to be offered to enrollees,
				showing benefits to which enrollees will be entitled together with any riders and
				endorsements;
D. Each type of provider
				contract, which must hold harmless all enrollees and otherwise comply with W. Va.
				Code '33-25A-7a;
E. Each enrollee contract form; and
F. An alphabetical list of all providers with whom
				the applicant has contracted for services, sorted by county and by specialty, and
				corresponding signature page(s) from each executed provider contract, sorted
				alphabetically, by county and by specialty;
g. A description of the applicant's enrollee
				grievance procedure, including all formal and informal steps for resolving
				grievances;
h. The applicant's financial
				statements, including:
A. Assets, liabilities and
				sources of financial support of the applicant and any corporation or organization
				owned or controlled by the applicant, evidencing adequate funding to meet
				continuously the minimum capital and surplus requirements required by W. Va. Code
				'33-25A-4(2)(c)(ii);
B. Monthly pro forma financial statements
				including a balance sheet, income statement and cash flow analysis, with annual
				totals, for the greater of three (3) years or until the applicant is projected to be
				profitable for twelve (12) consecutive months, on a statutory accounting principal
				basis with documentation of all assumptions used and income, expense and capital
				items projected;
C. A proposed initial
				cash and cash reserves summary, including loan receipts, loan repayments, stock
				sales, etc., and describing all sources and terms of funding; an independently
				certified, audited financial statement must be submitted for each
				guarantor;
D. A declaration that all
				investments have been valued for asset purposes on a basis currently approved by the
				National Association of Insurance Commissioners (NAIC), or, if any investments have
				not been so valued, a description of each investment and its basis of value shown on
				the "Asset Page" of the balance sheet;
E. The applicant's proposed methods for limiting
				its financial risk, including:
(a). If the
				applicant has secured reinsurance coverage, an executed copy of each applicable
				policy, together with each reinsurance agreement and any modification(s);
				and
(b). Any risk sharing with providers
				or other parties, referencing the applicable sections of any provider contracts that
				demonstrate risk sharing;
F.
				A completed "Fidelity Bond Work-sheet" on a form provided by the Insurance
				Commissioner and copy of the applicant's fidelity bond in the amount prescribed by
				the worksheet; and
G. A description and
				documentation of the applicant's arrangements to guarantee the continuation of
				benefits to enrollees and payments to providers for services rendered either prior
				to or after insolvency, for the duration of the enrollee's contract period for which
				payment has been made or until the discharge of an enrollee from an inpatient
				facility in which the enrollee is confined on the date of the applicant's
				insolvency;
i. The
				applicant's proposed marketing plan, including:
A.
				Marketing strategy for each major enrollment category (group, individual, PEIA,
				Medicare, Medicaid), including:
(a). Criteria for
				selection of primary and secondary targets;
(b). Use of underwriting guidelines; and
(c). Plans for community education and public
				relations;
B. Proposed
				charges for each enrollment category; and
C. A detailed marketing budget covering projected
				income, expenses and other sources of future capital for the greater of three (3)
				years or until the applicant is projected to be profitable for twelve (12)
				consecutive months:
(a). The marketing budget
				shall cover each major category of enrollment identified in the applicant's
				marketing strategy and shall include, but not be limited to, compensation, local and
				out-of-town travel, equipment, printing and postage, advertising and public
				relations, expense accounts and meeting costs and publications, if
				applicable;
j. If
				the applicant is not domiciled in West Virginia, a power of attorney duly executed
				by the applicant, appointing the commissioner and his or her successors in office
				and duly authorized deputies as the true and lawful attorney of the applicant in and
				for this State upon whom all lawful process in any legal action or proceeding
				against the applicant on a cause of action arising in this State may be
				served;
k. A description of the
				mechanism by which enrollees will be afforded an opportunity to participate in
				matters of the applicant's policies and operation;
l. A comprehensive feasibility study performed by
				a qualified independent actuary in conjunction with a certified public accountant:
A. The study shall include a certification by the
				actuary and an opinion by the certified public accountant as to the proposed
				organization's feasibility;
B. The study
				shall be for the greater of three years or until the applicant is projected to be
				profitable for twelve (12) consecutive months;
C. The study must show that the applicant would
				not, at the end of any month of the projection period, have less than the minimum
				capital and surplus required by W. Va. Code
'33-25A-4(2)(c)(ii);
D. The actuary shall certify that:
(a). The rates are neither inadequate nor
				excessive nor unfairly discriminatory;
(b). The rates are appropriate for the classes of
				risks for which they have been computed;
(c). The rating methodology is appropriate,
				provided that the certification shall include an adequate description of the rating
				methodology showing that the methodology follows consistent and equitable actuarial
				principles;
(d). The applicant is
				actuarially sound, provided that the certification shall consider the rates,
				benefits and expenses of, and any other funds available for the payment of
				obligations of, the applicant;
(e). The
				rates being charged or to be charged are actuarially adequate to the end of the
				period for which rates have been guaranteed; and
(f). Incurred but not reported claims and claims
				reported but not fully paid have been adequately provided for;
E. The applicant must send a copy of the study,
				for information only, to:
Rates and Forms Division
West Virginia Insurance Commissioner P.O. Box 50540
Charleston WV 25305-0540
The submission of a copy of the study does not constitute an
				  official filing of the applicant's rates and forms;
m. A description of assumptions underlying
				enrollment projections, including:
A. A projection
				of enrollment for the greater of three (3) years or until the applicant is projected
				to be profitable for twelve (12) consecutive months, on a statutory accounting
				principles basis;
B. The number of
				eligible persons residing within the proposed service area;
C. Contract size assumptions (contract
				distribution and content);
D.
				Penetration assumptions and rationale, including initial and
				re-enrollments;
E. An allowance for
				in-voluntary/voluntary disenrollment and group contract additions during each
				year;
F. Month and year when applicant
				first reports income equal to all expenses and enrollment on that date;
				and
G. A plan for emergency and
				out-of-area health care.
n. A
				description of competition, including:
A.
				Identification of the applicant's competitors operating in applicant's proposed
				geographic service area; and
B. Major
				differences between the applicant and competitors operating in applicant's proposed
				geographic service area; and
o. Notarized acknowledgments, which may be
				submitted on the "Acknowledgment and Waiver of Chief Executive Officer on Behalf of
				HMO Applicant" form provided by the Insurance Commissioner:
A. That a delinquency proceeding pursuant to W.
				Va. Code '33-10-1 et seq., or
				supervision by the Insurance Commissioner pursuant to W. Va. Code '33-34-1 et seq.,
				constitutes the sole and exclusive method for the liquidation, rehabilitation,
				reorganization or conservation, respectively, of a health maintenance
				organization;
B. That the applicant
				waives any right to file or be subject to, as a debtor, any federal bankruptcy
				proceeding; and
C. That the applicant's
				chief executive officer has read and understands his or her obligations under W. Va.
				Code '33-35-1 et seq., which
				imposes criminal sanctions for the failure to report to the Insurance Commissioner
				an impairment of the health maintenance organization;
p. Acknowledgment on a form provided by the
				Insurance Commissioner that once licensed, the applicant will observe the resident
				agent's law of West Virginia, including the countersignature and other requirements
				of W. Va. Code '33-12-1
				et seq.;
q. A description of the
				applicant's arrangements for ongoing evaluation of its quality of health
				care;
r. The applicant's procedure for
				development, compilation, evaluation and reporting of statistics relating to the
				cost of its operations, availability and accessibility of its services, the pattern
				of utilization of its services and the quality of health care provided; and
s. Such other information as the
				commissioner may request during review of the application.