(1)
Application for Initial
License. Any organization seeking licensure as an HMO under M.G.L.
c. 176G must submit an application that contains at least the following
information in a format specified by the Commissioner.
(a)
Internal Operations
Plan.
1. A copy of the basic
organizational documents, such as articles of incorporation, articles of
association, partnership agreement, trust agreement or any other applicable
document establishing the HMO and all amendments thereto;
2. A list of the Board of Directors or
similar policy-making body, including the name, principal occupation and
employer of each person;
3. A copy
of the by-laws, rules and regulations, or other similar document regulating the
conduct of the applicant's internal affairs;
4. A copy of the organizational chart with
titles in the areas of marketing, administration, enrollment, grievance
procedures, quality assurance, contract negotiation and financial
matters;
5. A narrative of the
health care plan, facilities and personnel including, but not limited to, the
organizational structure, a description of the service area and provider
network, the roles, functions, responsibilities of, and interrelationships
among providers and the methods of provider reimbursement and risk-sharing
arrangements;
6. An inventory of
owned, operated, contracted and participating provider facilities including,
but not limited to, hospitals, skilled nursing facilities, home health care and
medical care services;
7. For HMOs
who manage their own health care facilities only, a legal opinion from the
General Counsel of the Department of Public Health indicating whether the
applicant has complied with the requirements of M.G.L. c. 111;
8. A power of attorney authorizing the
Commissioner to accept service of process for any legal actions commenced
against an HMO not domiciled in the Commonwealth of Massachusetts;
and
9. For staff model HMOs only,
an inventory of full-time equivalents of providers by specialty with physician
to population ratios.
(b)
Utilization
Plan.
1. A statement of inpatient
and outpatient utilization review measures; and
2. statement of actuarial review and
certification of actuarial assumptions made regarding utilization as applied to
projected financial statements.
(c)
Quality
Assurance. A detailed description of the quality assurance system
or a certification that the description of the quality assurance system is
included in an accompanying accreditation filing submitted under
211 CMR 52.00:
Managed Care Consumer Protections and Accreditation of
Carriers.
(d)
Marketing Plan.
1. A
marketing plan describing the service area population and existing medical care
utilization rates for inpatient and outpatient services in existing facilities
in the service area;
2. The
anticipated enrollment for the HMO, and the service area population and
utilization rates projected for health services delivered in the HMO's service
area; and
3. A statement of the
size, organization, accountability and marketing methods of the marketing
staff.
(e)
Member Services.
1. A
copy of the evidence of coverage for each different product to be offered or a
certification that the evidences of coverage are included in an accompanying
accreditation filing submitted under
211 CMR 52.00:
Managed Care Consumer Protections and Accreditation of
Carriers, and a description of the HMO's process for distributing such
evidences of coverage to members;
2. A plan for the yearly publication and
distribution to members of rates, medical care service hours, location and
telephone number(s) for normal service, and for emergency service;
3. A map of the service area and a list of
towns included;
4. A copy of the
provider directory or a certification that the provider directories are
included in an accompanying accreditation filing submitted under
211 CMR 52.00:
Managed Care Consumer Protections and Accreditation of
Carriers, and a description of the process for distributing provider
directories to members;
5. A
statement of the confidentiality procedures used to maintain member
confidentiality involving medical records, grievances, quality assurance
studies and contractual provisions in provider agreements;
6. A detailed description of the formal
internal grievance systems including procedures for the registration of
grievances and procedures for resolution of grievances, with a descriptive
summary of written grievances made in the areas of medical care and
administrative services; and
7. For
renewal applications only, the total number and disposition of malpractice
claims and other claims relating to the service or care rendered by the HMO
made by, or on behalf of, members of the HMO that were settled or resulted in a
judgment during the year by the HMO.
(f)
Contractual
Arrangements.
1. A copy of the
forms of group contracts or a certification that the group contracts are
included in an accompanying accreditation filing submitted under
211 CMR 52.00:
Managed Care Consumer Protections and Accreditation of
Carriers;
2. A copy of
every contract form made or to be made between the applicant and any providers
of health services or a certification that the contract forms are included in
an accompanying accreditation filing submitted under
211 CMR 52.00:
Managed Care Consumer Protections and Accreditation of
Carriers;
3.
Administrative contracts including management and marketing contracts, and
rental and leasing agreements;
4.
Written procedures for the prior review and approval by the HMO of provider
subcontracts, including, but not limited to, the language requirements and
other standards by which the HMO reviews the subcontracts;
5. Written procedures by which the HMO
maintains on file original signed provider contracts and copies of signed
provider subcontracts; and
6. For
the purposes of 211 CMR 43.03(1)(f), "contract form" means a single copy of
each generic contract used for each type of provider and not a copy of every
contract signed between the HMO and provider.
(g)
Premium Rates.
1. Rates for all insured products offered, as
applied to projected financial statements;
2. A statement of the reasons for proposed
rates and benefits, their effective dates and their marketing impact;
3. A comparison of current rates, if
applicable, and proposed rates, listing premium cost components as percentage
of premium; and
4. An explanation
by the HMO's actuary supporting the actuarial assumptions and calculations
utilized in the submission. The derivation of the rates must be clear and
complete. All assumptions used must be stated and supported, and any
mathematical factors used must be both defined and derived.
(h)
Financial
Plan.
1. Audited financial
reports, maintained and prepared in accordance with statutory accounting
practices and procedures prescribed or permitted by the Commissioner, for at
least the prior three fiscal years, if applicable, of the HMO's existence.
Reports must be separate for HMOs operated as a line of business, division,
department, subsidiary or affiliate as provided in M.G.L. c. 176G, §
3;
2. Financial statements as
listed in 211 CMR 43.03(1)(h)2.a. through f. which project the results of
operations for the next three calendar years:
a. balance sheet;
b. statement of revenues and
expenses;
c. statement of changes
in capital and surplus;
d. cash
flow;
e. capital expenditure;
and
f. repayment schedule for
existing or anticipated loans or alternative financing arrangements.
The projection for year one shall consist of actual results for
quarters one and two, if available, as well as a projection for quarters three
and four. The projections for years two and three shall be on an annual basis.
The format shall be consistent with that specified for the quarterly reporting
filings and unaudited annual reports required to be filed with the Commissioner
pursuant to
211 CMR 43.04(2) and
(3).
3. A statement indicating when the HMO
estimates that enrollment income and other income from operations will equal
expenses;
4. Projections must be
accompanied by detailed statements of underlying assumptions used and the bases
thereof, including, but not limited to, projected premium rates and
documentation as required for premium rates. If available, independent
evaluations and assessment of these statements should also be
included;
5. A copy of the vote, or
portion thereof, of the Board of Directors or governing body of the HMO
designating the permissible forms of investments of HMO funds and any
limitations thereon;
6. Letters of
financial support, credit, bond, or loan guarantee or other financial guarantee
to the applicant;
7. A detailed
statement of the HMO's plan to establish and maintain reserves or other funds
as determined necessary to cover any risks projected and not otherwise assumed
by another entity, carrier or reinsurer; a detailed statement of current and
projected reserve establishment calculations, amounts, purpose and use of
reserve, and assumptions and bases thereof, including, but not limited to,
identification of reserves set aside to meet uncovered reinsurance
items;
8. Plans for a surety bond
or a deposit of cash or sureties in at least the same amount as a guarantee
that the obligation to the members will be performed, unless waived as provided
in M.G.L. c. 176G, § 15;
9.
Copies of all reinsurance, conversion or other agreements with other insurers,
health providers, medical service corporations, hospital service corporations,
governmental agencies or organizations or other HMOs to provide payment for the
cost of, or to provide the contracted for health care services in the event the
HMO is unable or ceases to provide contracted for health services for any
reason;
10. A copy of the HMO's
official notification of status as a federally qualified HMO if it is so
designated;
11. A statement of
insurance or funded self-insurance coverage for:
a. protection against loss of property and
liability of the HMO;
b. worker's
compensation to protect against claims arising from work-related injuries;
and
c. medical malpractice
liability insurance of the HMO and providers;
12. A listing of shareholders or members or
other equity holders or members with holdings of 5% or more of capital shares,
partnership interest or other evidence of equity holdings, by name, address,
number and percentage of shares or other interest held and any other
affiliations with the HMO;
13. A
listing of the applicant's legal, accounting and actuarial representatives by
name and address;
14. A statement
of the plan's accounting system and organization, management and internal
controls, method of estimating and handling incurred but not reported
liabilities;
15. A statement of
fidelity bond coverage of all officers and employees entrusted with the
handling of funds; and
16. A
detailed description of mechanisms to monitor the financial solvency of any
independent practice association, group practice, or other organization
contracting with the HMO that assumes substantial financial risk through
capitation or other prepaid risk-sharing or risk-transferring arrangements,
where substantial financial risk shall mean prepayments totaling more than 5%
of an HMO's annual health care expense.
[The following documents may be requested by the Commissioner,
but need not be submitted unless such request is made:]
17. Current financial statements for
guarantors of the HMO's contractual obligations;
18. Current financial statements for persons
or providers or corporate entities which have contracted with the HMO for the
provision of medical, administrative, or marketing services, audited if
available;
19. A current financial
statement of any person who holds a financial interest in the HMO;
and
20. Any additional information
as deemed necessary by the Commissioner.
(i)
Evidence of Compliance with
M.G.L. c. 176O and
211 CMR 52.00:
Managed Care Consumer Protections and Accreditation of
Carriers. Any HMO accredited by the Bureau of Managed Care shall be
deemed to meet the utilization review requirements of M.G.L. c. 176O and
211 CMR 52.00.
(j)
Filing Fee. For
initial applications, a filing fee in the amount of $1000 shall be
required.
(2)
License Renewal. Any organization seeking relicensure
as an HMO under M.G.L. c. 176G must submit an application for license renewal
that contains at least the following information in a format specified by the
Commissioner.
(a)
Filing
Fee. For renewal applications, a filing fee in the amount of
$1,000 shall be required.
(b)
Financial Plan. An annual report of financial
information maintained and prepared in accordance with statutory accounting
practices and procedures prescribed or permitted by the Commissioner, required
by M.G.L. c. 176G, § 10 and 211 CMR 43.03(1)(h).
(c)
Evidence of Compliance with
M.G.L. c. 176O and
211 CMR 52.00:
Managed Care Consumer Protections and Accreditation of
Carriers. Any HMO accredited by the Managed Care Bureau
shall be deemed to meet the utilization review requirements of M.G.L. c. 176O
and
211 CMR 52.00.
(d)
Material Changes to Initial
License Application.
1. An HMO
shall annually provide written notification to the Commissioner of any material
change to the information that was submitted as part of the application for
initial licensure according to 211 CMR 43.03(1).
2. This information shall be in addition to
the notification of any material changes that are subject to prior approval of
the Commissioner as required by M.G.L. c. 176G, § 16 and
211 CMR
43.08.
(e) Any additional information as deemed
necessary by the Commissioner.
(3)
Review of
Application. Upon receipt of a complete application, the
Commissioner shall review the submitted material to determine whether a license
shall be granted or renewed. The organization must demonstrate evidence of
meeting all requirements set forth in M.G.L. c. 176G, M.G.L. c. 176O,
211 CMR 43.00, and
52.00: Managed Care
Consumer Protections and Accreditation of Carriers including the
following:
(a) Corporate and organizational
structure capable of supporting the benefits offered;
(b) Compliance with requirements for
determination of need and facilities licenses;
(c) Power of authority authorizing
Commissioner to accept service of process for any legal actions commenced
against an HMO not domiciled in Massachusetts;
(d) Contractual agreements that adequately
protect the interests of members;
(e) Utilization systems ensuring the
appropriate and efficient use of health services;
(f) Quality assurance systems monitoring the
quality of care provided to members;
(g) Operations financially capable of meeting
the risk of providing health services;
(h) Clear and logical plan for marketing of
the HMO products;
(i) Adequate
provider networks to guarantee that all services contracted for will be
accessible to members without delays detrimental to the health of members;
and
(j) Sufficient financial
reserves or other resources to meet its financial obligations.
(5)
Denial of
License. If an application for a license is denied, the
Commissioner shall notify the organization in writing, stating the reason(s)
for the denial. The organization shall have the right to a hearing on its
application within 45 days of its receipt of such notice by filing a written
request for a hearing within 15 days of its receipt of such notice. Within 15
days after the conclusion of the hearing, the Commissioner shall either grant a
license or shall notify the organization in writing of the denial of a license
stating the reason(s) for the denial. The organization shall have the right to
judicial review of the Commissioner's decision in accordance with the
provisions of M.G.L. c. 30A, § 14.
(6)
Nonrenewal of
License. If an application for a license renewal is denied, the
Commissioner shall notify the organization in writing, stating the reason(s)
for the nonrenewal. The organization shall have the right to a hearing on its
application within 45 days of its receipt of such notice by filing a written
request for a hearing within 15 days of its receipt of such notice. Within 15
days after the conclusion of the hearing, the Commissioner shall either renew
the license or shall notify the organization in writing of the nonrenewal of a
license stating the reason(s) for the nonrenewal. The organization shall have
the right to judicial review of the Commissioner's decision in accordance with
the provisions of M.G.L. c. 30A, § 14. During the period following the
initial notice of nonrenewal, the HMO may be required to cease offering new
business or may be placed under administrative supervision.
(7)
Administrative Supervision,
Rehabilitation, Liquidation, or Revocation or Suspension of
License.
(a) The Commissioner may
seek administrative supervision, rehabilitation or liquidation pursuant to
M.G.L. c. 176G, §§ 20 or 20A or M.G.L. c. 175J, or revoke or suspend
the license issued to the HMO under M.G.L. c. 176G, § 14 for a period not
exceeding the unexpired terms thereof, if he or she finds, upon examination or
other evidence submitted to him or her any of the following conditions:
1. The HMO is insolvent or is in an unsound
condition;
2. The HMO's business
policies or methods are unsound or improper;
3. The HMO's condition or management is such
as to render its further transaction of business hazardous to the public or its
members or creditors;
4. The HMO is
transacting business fraudulently;
5. The HMO or its officers, representatives,
affiliates or agents have refused to submit to an examination under M.G.L. c.
176G, § 10 or to perform any legal obligation relative thereto;
6. The amount of the HMO's funds, net cash or
contingent assets is deficient;
7.
The HMO has attempted or is attempting to compromise with its creditors on the
ground that it is financially unable to pay its claims in full;
8. The HMO has inadequately reserved for
unearned premiums; or
9. The HMO
substantively fails to comply with the requirements of M.G.L. c. 176G, M.G.L.
c. 175J,
211 CMR 43.00, or any other
provision of law or regulation.
(b) Before any 211 CMR 43.03(7) action is
taken, the Commissioner shall notify the HMO in writing of his or her intention
to take action and the date and place for a hearing on the matter.
(c) Following the hearing, the Commissioner
shall notify the HMO in writing of any decision regarding administrative
supervision or the revocation or suspension of its license. The HMO has the
right to judicial review of the Commissioner's decision in accordance with the
provisions of M.G.L. c. 30A, § 14.
(d) Notwithstanding 211 CMR 43.03(7)(b) and
(c), if the Commissioner finds upon an examination or at any other time that:
1. an emergency exists requiring immediate
action;
2. if the HMO has given
consent;
3. the business of the HMO
is being conducted fraudulently; or
4. the HMO's condition renders the
continuance of its business hazardous, as defined in M.G.L. c. 175J, §
3(C), to its policyholders or the general public, he or she may, without a
hearing, order the suspension of the HMO's license pending further proceedings
or place the HMO under administrative supervision as set forth in M.G.L. c.
175J.
(e) Any revocation
or suspension shall be conducted pursuant to M.G.L. c. 176G, §
20A.