40-19c10. Disbursements for soliciting of subscribers and administrative expenses limited; administrative expenses defined; controlling costs.
40-19c10
40-19c10. Disbursements for soliciting of subscribers andadministrative expenses limited; administrative expenses defined; controllingcosts.(a) No corporation subject to the provisions of the nonprofit medical andhospital service corporation act shall during any one year disburse more than5% of the aggregate amount of the payments received from subscribers duringthat year as expenditures for the soliciting of subscribers, except that duringthe first year after the issuance of a permit, such corporation may so disbursenot more than 20% of such amount, during the second year not more than 15% andduring the third year not more than 10%.
(b) No such corporation shall, during any one year, disburse a sumgreater than 10% of the payments received from subscribers during that year asadministrative expenses. As used in this section the term "administrativeexpenses" shall include all expenditures for nonprofessional services includingall activities, contractual arrangements and projects authorized by K.S.A.40-19c04, and in general, all expenses not directly connected with thefurnishing of the benefits specified in this act, but not includingexpenses referred to in subsection (a) hereof.
(c) Each corporation organized under the nonprofit medical andhospital service corporation act shall devote a reasonable effort tocontrol costs, including both its administrative costs and cost chargedto it by participating hospitals and health care providers. Such effort shallinclude, but not be limited to, a continuing attempt by such corporationthrough a combination of education, persuasion and financial incentives anddisincentives to control cost and to encourage participating health careproviders and hospitals to control cost by: (1) Elimination of duplicative orunnecessary services, facilities, and equipment; (2) nonprovider participationin the affairs of the corporation; (3) subscriber support of cost containmentactivities; (4) promotion of sound management practices in participatinghospitals; (5) promotion of efficient delivery of health care services byparticipating health care providers; (6) implementation of sound managementpractices within the nonprofit medical and hospital service corporation; (7)promotion of alternative forms of health care; and (8) engagement in, andevaluation of, cost control experiments, including incentive reimbursement andutilization and peer review programs.
History: L. 1980, ch. 137, § 28; L. 1990, ch. 168, § 5; July 1.