38.2-4301 - Establishment of health maintenance organizations.
§ 38.2-4301. Establishment of health maintenance organizations.
A. No person shall establish or operate a health maintenance organization inthe Commonwealth without obtaining a license from the Commission. Any person,including a foreign corporation, may apply to the Commission for a license toestablish and operate a health maintenance organization in compliance withthis chapter.
B. Each application for a license shall be verified by an officer orauthorized representative of the applicant, shall be in a form prescribed bythe Commission, and shall set forth or be accompanied by the following:
1. A copy of any basic organizational document of the applicant including,but not limited to, the articles of incorporation, articles of association,partnership agreement, trust agreement, or other applicable documents, andall amendments to those documents;
2. A copy of the bylaws, rules and regulations, or any similar documentregulating the conduct of the internal affairs of the applicant;
3. A list of the names, addresses, and official positions, and biographicalinformation on forms acceptable to the Commission of each member of thegoverning body and any person with authority to manage or establish policy;and a full disclosure in the application of (i) any financial interestbetween such persons or any provider, organization or corporation owned orcontrolled by such person and the health maintenance organization and (ii)the extent and nature of the financial arrangements between such persons andthe health maintenance organization;
4. A disclosure of any person owning or having the right to acquire fivepercent or more of the voting securities or subordinated debt of theapplicant;
5. A copy of any contract made or to be made between any providers, sponsors,or organizers of the health maintenance organization, or persons listed insubdivision 3 of this subsection and the applicant;
6. A copy of the evidence of coverage form to be issued to subscribers;
7. A copy of any group contract form that is to be issued to employers,unions, trustees, or other organizations. All group contracts shall set forththe right of subscribers to convert their coverages to an individual contractissued by the health maintenance organization;
8. Financial statements showing the applicant's assets, liabilities, andsources of financial support and, if the applicant's financial affairs areaudited by independent certified public accountants, a copy of theapplicant's most recent certified financial statement unless the Commissiondirects that additional or more recent financial information is required forthe proper administration of this chapter;
9. A complete description of the health maintenance organization and itsmethod of operation, including (i) the method of marketing the plan, (ii) astatement regarding the sources of working capital as well as any othersources of funding, and (iii) a description of any insurance, reinsurance, oralternative coverage arrangements proposed, including excess insurance orstop loss insurance;
10. A description of the mechanism by which enrollees will be given anopportunity to participate in matters of policy and operation as provided insubsection B of § 38.2-4304;
11. A financial feasibility plan which includes, but is not limited to, (i)detailed enrollment projections, (ii) the methodology for determining premiumrates to be charged during at least the first three years of operations andextending one year beyond the anticipated break-even point certified by anactuary, and (iii) a projection, along with material assumptions, of balancesheets, cash flow statements showing capital expenditures and purchase andsale of investments, income statements, and statements of anticipated coveredand uncovered expenses on a quarterly basis for at least three years andextending one year beyond the anticipated break-even point; and
12. Any other information the Commission may require to make thedeterminations required pursuant to § 38.2-4302.
C. Notwithstanding any other provision of this title, no license shall berequired of a health maintenance organization duly licensed in a statecontiguous to the Commonwealth that contracts on a limited basis with healthcare providers in the Commonwealth for the provision of health care servicesto enrollees covered under a group contract neither delivered nor issued fordelivery in the Commonwealth, provided that:
1. The number of Virginia residents receiving such health care services shallnot exceed 500 enrollees of such health maintenance organization; and
2. The contracts with such providers shall contain a hold harmless clausethat is not less favorable in any respect to any enrollee that is a Virginiaresident than the "hold harmless clause" set forth in subdivision C 9 of §38.2-5805.
(1980, c. 720, § 38.1-864; 1986, c. 562; 1998, c. 891; 2000, cc. 503, 753;2004, c. 175.)