Code of Maryland Regulations
Title 31 - MARYLAND INSURANCE ADMINISTRATION
Subtitle 12 - HEALTH MAINTENANCE ORGANIZATIONS; ENTITIES THAT ACT AS HEALTH INSURERS
Chapter 31.12.06 - Managed Care Organizations - Financial Compliance Requirements
Section 31.12.06.03 - Application of Maryland Insurance Acquisitions Disclosure and Control Act

Universal Citation: MD Code Reg 31.12.06.03

Current through Register Vol. 51, No. 19, September 20, 2024

A. Exemption. If the Commissioner determines that this regulation or a part of this regulation is not intended to apply to a managed care organization or affiliate, the Commissioner may exempt the managed care organization or affiliate from this regulation or the part of this regulation.

B. In this regulation, the following terms have the meanings indicated:

(1) "Holding company" means a person that directly or indirectly controls a managed care organization, or controls a person that controls a managed care organization.

(2) "Holding company system" means two or more affiliates, at least one of which is a managed care organization.

C. Subject to this regulation, the provisions of Insurance Article, Title 7, Annotated Code of Maryland apply to managed care organizations.

D. Change of Ownership.

(1) An MCO shall notify the Commissioner within 10 days of any transfer of ownership or of more than an aggregate of 10 percent of the stock or ownership interest in the MCO to a purchaser occurring during any 12-month period.

(2) An MCO shall comply with the procedures required by Insurance Article, Title 7, Annotated Code of Maryland, before the purchaser may:

(a) Make a tender for, or a request or invitation for tenders of, or enter into an agreement to exchange securities for, or acquire in the open market or otherwise, any voting security of a domestic MCO or enter into any other such agreement if, after the consummation thereof, that purchaser would, directly or indirectly, or by conversion, or by exercise of any right to acquire, be in control of the domestic MCO; or

(b) Enter into an agreement to merge or consolidate with, or otherwise to acquire control of, a domestic MCO.

(3) Before approval of any transfer of ownership, stock, or ownership interest in an MCO, the Commissioner shall consult with the Secretary.

E. Registration Statements.

(1) Each managed care organization that is a member of a holding company system shall file a registration statement with the Commissioner on or before:

(a) July 31, 2004; and

(b) May 1 of each year after 2004.

(2) The registration statement shall be in a form similar to that required under Insurance Article, § 7-603, Annotated Code of Maryland, containing the following current information:

(a) The corporate and capital structure, general financial condition, ownership, and management of the managed care organization and of any person controlling the managed care organization;

(b) The identity and relationship of each member of the holding company system;

(c) Any pledge of the managed care organization's stock, including stock of a subsidiary or controlling affiliate, for a loan made to any member of the holding company system;

(d) The following agreements in force, and transactions currently outstanding or that have occurred during the previous calendar year between the managed care organization and the managed care organization's affiliates:

(i) Loans, other investments, purchases, sales, and exchanges of securities of the affiliates by the managed care organization or of the managed care organization by its affiliates;

(ii) Purchases, sales, and exchanges of assets;

(iii) Transactions not in the ordinary course of business;

(iv) Except for managed care contracts entered into in the ordinary course of the managed care organization's business, guarantees or undertakings for the benefit of an affiliate that result in an actual contingent exposure to liability of the managed care organization's assets;

(v) Management agreements, service contracts, and cost-sharing arrangements;

(vi) Reinsurance agreements;

(vii) Dividends and other distributions to shareholders; and

(viii) Consolidated tax allocation agreements;

(e) Any other matters about transactions between the managed care organization and its affiliates that the registration statement form requires; and

(f) A summary outlining all items in the current registration statement that represent changes from the prior registration statement.

(3) Each affiliate in a holding company system shall give a managed care organization subject to registration under this section that is in the same holding company system complete and accurate information if that information is reasonably necessary to enable the managed care organization to comply with this regulation.

(4) The Commissioner may allow or require affiliated managed care organizations subject to registration under this section to file a consolidated registration statement.

F. Agreements in Force.

(1) As part of its initial registration statement, each managed care organization shall report each agreement in force as of December 31, 2002, pertaining to the transactions specified in §E(2)(d) of this regulation, between the managed care organization and any other member of its holding company system.

(2) Each agreement in force reported under §E(2)(d) of this regulation and otherwise subject to prior approval of the Commissioner, shall be deemed approved as of the date the initial registration is filed with the Commissioner.

(3) Notwithstanding §F(2) of this regulation, the Commissioner retains the right to request the managed care organization to submit any of the reported agreements in force to the Commissioner for review.

G. A transaction specified in Insurance Article, § 7-703(e), Annotated Code of Maryland, between a managed care organization and another member of the same insurance holding company system is subject to the requirements of Insurance Article, § 7-703(b) -(d), Annotated Code of Maryland, if the projected annual amount of the transaction equals or exceeds the lesser of 3 percent of the managed care organization's admitted assets, or 25 percent of its surplus as regards policyholders as of the December 31 immediately preceding the transaction.

H. Agreements Between MCOs and Health Care Providers.

(1) Except as provided in §H(2) of this regulation, the provisions of Insurance Article, § 7-703, Annotated Code of Maryland, do not apply to agreements entered into between a managed care organization and a provider of health care services that is a member of the same holding company system, if the rates paid to the provider are regulated by the Health Services Cost Review Commission.

(2) The Commissioner may require the managed care organization to submit an agreement under this section to the Commissioner for review.

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