Sec. 38a-479aa. Preferred provider networks. Definitions. Licensing. Fees. Requirements. Exception, regulations.
Sec. 38a-479aa. Preferred provider networks. Definitions. Licensing. Fees.
Requirements. Exception, regulations. (a) As used in this part and subsection (b) of
section 20-138b:
(1) "Covered benefits" means health care services to which an enrollee is entitled
under the terms of a managed care plan;
(2) "Enrollee" means an individual who is eligible to receive health care services
through a preferred provider network;
(3) "Health care services" means health care related services or products rendered
or sold by a provider within the scope of the provider's license or legal authorization,
and includes hospital, medical, surgical, dental, vision and pharmaceutical services or
products;
(4) "Managed care organization" means (A) a managed care organization, as defined in section 38a-478, (B) any other health insurer, or (C) a reinsurer with respect to
health insurance;
(5) "Managed care plan" means a managed care plan, as defined in section 38a-478;
(6) "Person" means an individual, agency, political subdivision, partnership, corporation, limited liability company, association or any other entity;
(7) "Preferred provider network" means a person, which is not a managed care
organization, but which pays claims for the delivery of health care services, accepts
financial risk for the delivery of health care services and establishes, operates or maintains an arrangement or contract with providers relating to (A) the health care services
rendered by the providers, and (B) the amounts to be paid to the providers for such
services. "Preferred provider network" does not include (i) a workers' compensation
preferred provider organization established pursuant to section 31-279-10 of the regulations of Connecticut state agencies, (ii) an independent practice association or physician
hospital organization whose primary function is to contract with insurers and provide
services to providers, (iii) a clinical laboratory, licensed pursuant to section 19a-30,
whose primary payments for any contracted or referred services are made to other licensed clinical laboratories or for associated pathology services, or (iv) a pharmacy
benefits manager responsible for administering pharmacy claims whose primary function is to administer the pharmacy benefit on behalf of a health benefit plan;
(8) "Provider" means an individual or entity duly licensed or legally authorized to
provide health care services; and
(9) "Commissioner" means the Insurance Commissioner.
(b) On and after May 1, 2004, no preferred provider network may enter into or
renew a contractual relationship with a managed care organization unless the preferred
provider network is licensed by the commissioner. On and after May 1, 2005, no preferred provider network may conduct business in this state unless it is licensed by the
commissioner. Any person seeking to obtain or renew a license shall submit an application to the commissioner, on such form as the commissioner may prescribe, and shall
include the filing described in this subsection, except that a person seeking to renew a
license may submit only the information necessary to update its previous filing. Applications shall be submitted by March first of each year in order to qualify for the May first
license issue or renewal date. The filing required from such preferred provider network
shall include the following information: (1) The identity of the preferred provider network and any company or organization controlling the operation of the preferred provider network, including the name, business address, contact person, a description of
the controlling company or organization and, where applicable, the following: (A) A
certificate from the Secretary of the State regarding the preferred provider network's
and the controlling company's or organization's good standing to do business in the
state; (B) a copy of the preferred provider network's and the controlling company's or
organization's financial statement completed in accordance with sections 38a-53 and
38a-54, as applicable, for the end of its most recently concluded fiscal year, along with
the name and address of any public accounting firm or internal accountant which prepared or assisted in the preparation of such financial statement; (C) a list of the names,
official positions and occupations of members of the preferred provider network's and
the controlling company's or organization's board of directors or other policy-making
body and of those executive officers who are responsible for the preferred provider
network's and controlling company's or organization's activities with respect to the
health care services network; (D) a list of the preferred provider network's and the
controlling company's or organization's principal owners; (E) in the case of an out-of-state preferred provider network, controlling company or organization, a certificate that
such preferred provider network, company or organization is in good standing in its
state of organization; (F) in the case of a Connecticut or out-of-state preferred provider
network, controlling company or organization, a report of the details of any suspension,
sanction or other disciplinary action relating to such preferred provider network, or
controlling company or organization in this state or in any other state; and (G) the
identity, address and current relationship of any related or predecessor controlling company or organization. For purposes of this subparagraph, "related" means that a substantial number of the board or policy-making body members, executive officers or principal
owners of both companies are the same; (2) a general description of the preferred provider network and participation in the preferred provider network, including: (A) The
geographical service area of and the names of the hospitals included in the preferred
provider network; (B) the primary care physicians, the specialty physicians, any other
contracting providers and the number and percentage of each group's capacity to accept
new patients; (C) a list of all entities on whose behalf the preferred provider network
has contracts or agreements to provide health care services; (D) a table listing all major
categories of health care services provided by the preferred provider network; (E) an
approximate number of total enrollees served in all of the preferred provider network's
contracts or agreements; (F) a list of subcontractors of the preferred provider network,
not including individual participating providers, that assume financial risk from the
preferred provider network and to what extent each subcontractor assumes financial
risk; (G) a contingency plan describing how contracted health care services will be
provided in the event of insolvency; and (H) any other information requested by the
commissioner; and (3) the name and address of the person to whom applications may
be made for participation.
(c) Any person developing a preferred provider network, or expanding a preferred
provider network into a new county, pursuant to this section and subsection (b) of section
20-138b, shall publish a notice, in at least one newspaper having a substantial circulation
in the service area in which the preferred provider network operates or will operate,
indicating such planned development or expansion. Such notice shall include the medical specialties included in the preferred provider network, the name and address of the
person to whom applications may be made for participation and a time frame for making
application. The preferred provider network shall provide the applicant with written
acknowledgment of receipt of the application. Each complete application shall be considered by the preferred provider network in a timely manner.
(d) (1) Each preferred provider network shall file with the commissioner and make
available upon request from a provider the general criteria for its selection or termination
of providers. Disclosure shall not be required of criteria deemed by the preferred provider
network to be of a proprietary or competitive nature that would hurt the preferred provider network's ability to compete or to manage health care services. For purposes of
this section, criteria is of a proprietary or competitive nature if it has the tendency to
cause providers to alter their practice pattern in a manner that would circumvent efforts
to contain health care costs and criteria is of a proprietary nature if revealing the criteria
would cause the preferred provider network's competitors to obtain valuable business
information.
(2) If a preferred provider network uses criteria that have not been filed pursuant
to subdivision (1) of this subsection to judge the quality and cost-effectiveness of a
provider's practice under any specific program within the preferred provider network,
the preferred provider network may not reject or terminate the provider participating in
that program based upon such criteria until the provider has been informed of the criteria
that the provider's practice fails to meet.
(e) Each preferred provider network shall permit the Insurance Commissioner to
inspect its books and records.
(f) Each preferred provider network shall permit the commissioner to examine,
under oath, any officer or agent of the preferred provider network or controlling company
or organization with respect to the use of the funds of the preferred provider network,
company or organization, and compliance with (1) the provisions of this part, and (2)
the terms and conditions of its contracts to provide health care services.
(g) Each preferred provider network shall file with the commissioner a notice of
any material modification of any matter or document furnished pursuant to this part, and
shall include such supporting documents as are necessary to explain the modification.
(h) Each preferred provider network shall maintain a minimum net worth of either
(1) the greater of (A) two hundred fifty thousand dollars, or (B) an amount equal to eight
per cent of its annual expenditures as reported on its most recent financial statement
completed and filed with the commissioner in accordance with sections 38a-53 and 38a-54, as applicable, or (2) another amount determined by the commissioner.
(i) Each preferred provider network shall maintain or arrange for a letter of credit,
bond, surety, reinsurance, reserve or other financial security acceptable to the commissioner for the exclusive use of paying any outstanding amounts owed participating providers in the event of insolvency or nonpayment except that any remaining security may
be used for the purpose of reimbursing managed care organizations in accordance with
subsection (b) of section 38a-479bb. Such outstanding amount shall be at least an amount
equal to the greater of (1) an amount sufficient to make payments to participating providers for two months determined on the basis of the two months within the past year with
the greatest amounts owed by the preferred provider network to participating providers,
(2) the actual outstanding amount owed by the preferred provider network to participating providers, or (3) another amount determined by the commissioner. Such amount
may be credited against the preferred provider network's minimum net worth requirements set forth in subsection (h) of this section. The commissioner shall review such
security amount and calculation on a quarterly basis.
(j) Each preferred provider network shall pay the applicable license or renewal fee
specified in section 38a-11. The commissioner shall use the amount of such fees solely
for the purpose of regulating preferred provider networks.
(k) In no event, including, but not limited to, nonpayment by the managed care
organization, insolvency of the managed care organization, or breach of contract between the managed care organization and the preferred provider network, shall a preferred provider network bill, charge, collect a deposit from, seek compensation, remuneration or reimbursement from, or have any recourse against an enrollee or an enrollee's
designee, other than the managed care organization, for covered benefits provided, except that the preferred provider network may collect any copayments, deductibles or
other out-of-pocket expenses that the enrollee is required to pay pursuant to the managed
care plan.
(l) Each contract or agreement between a preferred provider network and a participating provider shall contain a provision that if the preferred provider network fails to
pay for health care services as set forth in the contract, the enrollee shall not be liable
to the participating provider for any sums owed by the preferred provider network or
any sums owed by the managed care organization because of nonpayment by the managed care organization, insolvency of the managed care organization or breach of contract between the managed care organization and the preferred provider network.
(m) Each utilization review determination made by or on behalf of a preferred provider network shall be made in accordance with sections 38a-226 to 38a-226d, inclusive,
except that any initial appeal of a determination not to certify an admission, service,
procedure or extension of stay shall be conducted in accordance with subdivision (7)
of subsection (a) of section 38a-226c, and any subsequent appeal shall be referred to
the managed care organization on whose behalf the preferred provider network provides
services. The managed care organization shall conduct the subsequent appeal in accordance with said subdivision.
(n) The requirements of subsections (h) and (i) of this section shall not apply to a
consortium of federally qualified health centers funded by the state, providing services
only to recipients of programs administered by the Department of Social Services. The
Commissioner of Social Services shall adopt regulations, in accordance with chapter
54, to establish criteria to certify any such federally qualified health center, including,
but not limited to, minimum reserve fund requirements.
(June Sp. Sess. P.A. 01-4, S. 21; P.A. 03-169, S. 1; P.A. 06-90, S. 1; 06-196, S. 294; P.A. 07-191, S. 1; 07-200, S. 10;
P.A. 08-147, S. 14; 08-184, S. 43.)
History: P.A. 03-169 amended Subsec. (a) to substantially revise definitions, amended Subsec. (b) to require licensure
before May 1, 2004, or May 1, 2005, for certain activities and to revise filing requirements, amended Subsec. (d) to make
technical changes, amended Subsec. (e) to allow the commissioner to inspect books and records, and added new Subsecs.
(f) to (m), inclusive, re requirements for preferred provider networks; P.A. 06-90 amended Subsec. (a)(7) to insert clause
designators in exclusion from definition of "preferred provider network" and to include in such exclusion, clause (iii) re
private clinical laboratory licensed under Sec. 19a-30 whose primary payments for services are made to other licensed
clinical laboratories or for associated pathology services, effective May 30, 2006; P.A. 06-196 amended Subsec. (a)(7) by
deleting "private" re licensed clinical laboratory in clause (iii), effective June 7, 2006; P.A. 07-191 amended Subsec. (i)(1)
to provide that outstanding amount be at least equal to greater of an amount sufficient to make payments to participating
providers for two months determined on basis of the two months within past year with greatest amounts owed to providers,
rather than two "quarters", effective July 1, 2007; P.A. 07-200 amended Subsec. (a)(7) to insert as exclusion from definition
of "preferred provider network" clause (iv) re pharmacy benefits manager responsible for administering pharmacy claims
whose primary function is to administer pharmacy benefit on behalf of a health benefit plan, effective January 1, 2008;
P.A. 08-147 and P.A. 08-184 added Subsec. (n) exempting certain federally qualified health centers from requirements of
Subsecs. (h) and (i) and requiring Commissioner of Social Services to adopt regulations re criteria to certify such federally
qualified health centers, effective June 12, 2008.