Sec. 38a-479bb. Requirements for managed care organizations that contract with preferred provider networks. Requirements for preferred provider networks.
Sec. 38a-479bb. Requirements for managed care organizations that contract
with preferred provider networks. Requirements for preferred provider networks.
(a) On and after May 1, 2004, no managed care organization may enter into or renew
a contractual relationship with a preferred provider network that is not licensed in accordance with section 38a-479aa. On and after May 1, 2005, no managed care organization
may continue or maintain a contractual relationship with a preferred provider network
that is not licensed in accordance with section 38a-479aa.
(b) Each managed care organization that contracts with a preferred provider network
shall (1) post and maintain or require the preferred provider network to post and maintain
a letter of credit, bond, surety, reinsurance, reserve or other financial security acceptable
to the Insurance Commissioner, in order to satisfy the risk accepted by the preferred
provider network pursuant to the contract, in an amount calculated in accordance with
subsection (i) of section 38a-479aa, and (2) determine who posts and maintains the
security required under subdivision (1) of this subsection. In the event of insolvency or
nonpayment such security shall be used by the preferred provider network, or other
entity designated by the commissioner, solely for the purpose of paying any outstanding
amounts owed participating providers, except that any remaining security may be used
for the purpose of reimbursing the managed care organization for any payments made
by the managed care organization to participating providers on behalf of the preferred
provider network.
(c) Each managed care organization that contracts with a preferred provider network
shall provide to the preferred provider network at the time the contract is entered into
and annually thereafter:
(1) Information, as determined by the managed care organization, regarding the
amount and method of remuneration to be paid to the preferred provider network;
(2) Information, as determined by the managed care organization, to assist the preferred provider network in being informed regarding any financial risk assumed under
the contract or agreement, including, but not limited to, enrollment data, primary care
provider to covered person ratios, provider to covered person ratios by specialty, a table
of the services that the preferred provider network is responsible for, expected or projected utilization rates, and all factors used to adjust payments or risk-sharing targets;
(3) The National Associations of Insurance Commissioners annual statement for
the managed care organization; and
(4) Any other information the commissioner may require.
(d) Each managed care organization shall ensure that any contract it has with a
preferred provider network includes:
(1) A provision that requires the preferred provider network to provide to the managed care organization at the time a contract is entered into, annually, and upon request
of the managed care organization, (A) the financial statement completed in accordance
with sections 38a-53 and 38a-54, as applicable, and section 38a-479aa; (B) documentation that satisfies the managed care organization that the preferred provider network has
sufficient ability to accept financial risk; (C) documentation that satisfies the managed
care organization that the preferred provider network has appropriate management expertise and infrastructure; (D) documentation that satisfies the managed care organization that the preferred provider network has an adequate provider network taking into
account the geographic distribution of enrollees and participating providers and whether
participating providers are accepting new patients; (E) an accurate list of participating
providers; and (F) documentation that satisfies the managed care organization that the
preferred provider network has the ability to ensure the delivery of health care services
as set forth in the contract;
(2) A provision that requires the preferred provider network to provide to the managed care organization a quarterly status report that includes (A) information updating
the financial statement completed in accordance with sections 38a-53 and 38a-54, as
applicable, and section 38a-479aa; (B) a report showing amounts paid to those providers
who provide health care services on behalf of the managed care organization; (C) an
estimate of payments due providers but not yet reported by providers; (D) amounts owed
to providers for that quarter; and (E) the number of utilization review determinations
not to certify an admission, service, procedure or extension of stay made by or on behalf
of the preferred provider network and the outcome of such determination on appeal;
(3) A provision that requires the preferred provider network to provide notice to
the managed care organization not later than five business days after (A) any change
involving the ownership structure of the preferred provider network; (B) financial or
operational concerns arise regarding the financial viability of the preferred provider
network; or (C) the preferred provider network's loss of a license in this or any other state;
(4) A provision that if the managed care organization fails to pay for health care
services as set forth in the contract, the enrollee will not be liable to the provider or
preferred provider network for any sums owed by the managed care organization or
preferred provider network;
(5) A provision that the preferred provider network shall include in all contracts
between the preferred provider network and participating providers a provision that if
the preferred provider network fails to pay for health care services as set forth in the
contract, for any reason, the enrollee shall not be liable to the participating provider or
preferred provider network 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;
(6) A provision requiring the preferred provider network to provide information to
the managed care organization, satisfactory to the managed care organization, regarding
the preferred provider network's reserves for financial risk;
(7) A provision that (A) the preferred provider network or managed care organization shall post and maintain a letter of credit, bond, surety, reinsurance, reserve or other
financial security acceptable to the commissioner, in order to satisfy the risk accepted
by the preferred provider network pursuant to the contract, in an amount calculated in
accordance with subsection (i) of section 38a-479aa, (B) the managed care organization
shall determine who posts and maintains the security required under subparagraph (A)
of this subdivision, and (C) in the event of insolvency or nonpayment, such security
shall be used by the preferred provider network, or other entity designated by the commissioner, solely for the purpose of paying any outstanding amounts owed participating
providers, except that any remaining security may be used for the purpose of reimbursing
the managed care organization for any payments made by the managed care organization
to participating providers on behalf of the preferred provider network;
(8) A provision under which the managed care organization is permitted, at the
discretion of the managed care organization, to pay participating providers directly and
in lieu of the preferred provider network in the event of insolvency or mismanagement
by the preferred provider network and that payments made pursuant to this subdivision
may be made or reimbursed from the security posted pursuant to subsection (b) of this
section;
(9) A provision transferring and assigning contracts between the preferred provider
network and participating providers to the managed care organization for the provision
of future services by participating providers to enrollees, at the discretion of the managed
care organization, in the event the preferred provider network (A) becomes insolvent,
(B) otherwise ceases to conduct business, as determined by the commissioner, or (C)
demonstrates a pattern of nonpayment of authorized claims, as determined by the commissioner, for a period in excess of ninety days;
(10) A provision that each contract or agreement between the preferred provider
network and participating providers shall include a provision transferring and assigning
contracts between the preferred provider network and participating providers to the
managed care organization for the provision of future health care services by participating providers to enrollees, at the discretion of the managed care organization, in the
event the preferred provider network (A) becomes insolvent, (B) otherwise ceases to
conduct business, as determined by the commissioner, or (C) demonstrates a pattern of
nonpayment of authorized claims, as determined by the commissioner, for a period in
excess of ninety days;
(11) A provision that the preferred provider network shall pay for the delivery of
health care services and operate or maintain arrangements or contracts with providers
in a manner consistent with the provisions of law that apply to the managed care organization's contracts with enrollees and providers; and
(12) A provision that the preferred provider network shall ensure that utilization
review determinations are 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 made in accordance with subdivision (7) of
subsection (a) of section 38a-226c. In cases where an appeal to reverse a determination
not to certify is unsuccessful, the preferred provider network shall refer the case to
the managed care organization which shall conduct the subsequent appeal, if any, in
accordance with said subdivision.
(e) Each managed care organization that contracts with a preferred provider network
shall have adequate procedures in place to notify the commissioner that a preferred
provider network has experienced an event that may threaten the preferred provider
network's ability to materially perform under its contract with the managed care organization. The managed care organization shall provide such notice to the commissioner
not later than five days after it discovers that the preferred provider network has experienced such an event.
(f) Each managed care organization that contracts with a preferred provider network
shall monitor and maintain systems and controls for monitoring the financial health of
the preferred provider networks with which it contracts.
(g) Each managed care organization that contracts with a preferred provider network
shall provide to the commissioner, and update on an annual basis, a contingency plan,
satisfactory to the commissioner, describing how health care services will be provided
to enrollees if the preferred provider network becomes insolvent or is mismanaged. The
contingency plan shall include a description of what contractual and financial steps have
been taken to ensure continuity of care to enrollees if the preferred provider network
becomes insolvent or is mismanaged.
(h) Notwithstanding any agreement to the contrary, each managed care organization
shall retain full responsibility to its enrollees for providing coverage for health care
services pursuant to any applicable managed care plan and any applicable state or federal
law. Each managed care organization shall exercise due diligence in its selection and
oversight of a preferred provider network.
(i) Notwithstanding any agreement to the contrary, each managed care organization
shall be able to demonstrate to the satisfaction of the commissioner that the managed
care organization can fulfill its nontransferable obligations to provide coverage for the
provision of health care services to enrollees in the event of the failure, for any reason,
of a preferred provider network.
(j) Each managed care organization that contracts with a preferred provider network
shall provide that in the event of the failure, for any reason, of a preferred provider
network, the managed care organization shall provide coverage for the enrollee to continue covered treatment with the provider who treated the enrollee under the preferred
provider network contract regardless of whether the provider participates in any plan
operated by the managed care organization. In the event of such failure, the managed
care organization shall continue coverage until the earlier of (1) the date the enrollee's
treatment is completed under a treatment plan that was authorized and in effect on the
date of the failure, or (2) the date the contract between the enrollee and the managed care
organization terminates. The managed care organization shall compensate a provider for
such continued treatment at the rate due the provider under the provider's contract with
the failed preferred provider network.
(k) Each managed care organization that contracts with a preferred provider network
shall confirm the information in the quarterly status report submitted by the preferred
provider network pursuant to subdivision (2) of subsection (d) of this section and shall
submit such information to the commissioner, on such form as the commissioner prescribes, not later than ten days after receiving a request from the commissioner for such
information.
(l) (1) Each managed care organization that contracts with a preferred provider
network shall certify annually to the commissioner, on such form and in such manner
as the commissioner prescribes, that the managed care organization has reviewed the
documentation submitted by the preferred provider network pursuant to subdivision (l)
of subsection (d) of this section and has determined that the preferred provider network
maintains a provider network that is adequate to ensure the delivery of health care services as set forth in the contract. If the commissioner finds that the certification was not
submitted in good faith, the commissioner may deem the managed care organization to
have not complied with this subsection and may take action pursuant to section 38a-479ee.
(2) If the managed care organization determines that the preferred provider network's provider network is not adequate and must be increased, the managed care organization shall provide written notice of the determination to the commissioner. Such
notice shall describe (A) any plan in place for the preferred provider network to increase
its provider network, and (B) the managed care organization's contingency plan in the
event the preferred provider network does not satisfactorily increase its provider
network.
(m) Nothing in this part or part 1a of this chapter shall be construed to require
a preferred provider network to share proprietary information with a managed care
organization concerning contracts or financial arrangements with providers who are
not included in that managed care organization's network, or other preferred provider
networks or managed care organizations.
(P.A. 03-169, S. 2; P.A. 07-217, S. 157.)
History: P.A. 03-169 effective May 1, 2004; P.A. 07-217 made technical changes in Subsec. (1)(2), effective July
12, 2007.