Section 500.3551 - Health maintenance organization; net worth.
THE INSURANCE CODE OF 1956 (EXCERPT)
Act 218 of 1956
500.3551 Health maintenance organization; net worth.
Sec. 3551.
(1) A health maintenance organization's minimum net worth shall be determined using accounting procedures approved by the commissioner that ensure that a health maintenance organization is financially and actuarially sound.
(2) A health maintenance organization licensed under former part 210 of the public health code, 1978 PA 368, on the effective date of this chapter that automatically received a certificate of authority under section 3505(1) shall possess and maintain unimpaired net worth as required under former section 21034 of the public health code, 1978 PA 368, until the earlier of the following:
(a) The health maintenance organization attains a level of net worth as provided in subsection (3) at which time the health maintenance organization shall continue to maintain that level of net worth.
(b) December 31, 2003.
(3) A health maintenance organization applying for a certificate of authority on or after the effective date of this chapter and a health maintenance organization wishing to maintain a certificate of authority in this state after December 31, 2003 shall possess and maintain unimpaired net worth in an amount determined adequate by the commissioner to continue to comply with section 403 but not less than the following:
(a) For a health maintenance organization that contracts or employs providers in numbers sufficient to provide 90% of the health maintenance organization's benefit payout, minimum net worth is the greatest of the following:
(i) $1,500,000.00.
(ii) Four percent of the health maintenance organization's subscription revenue.
(iii) Three months' uncovered expenditures.
(b) For a health maintenance organization that does not contract or employ providers in numbers sufficient to provide 90% of the health maintenance organization's benefit payout, minimum net worth is the greatest of the following:
(i) $3,000,000.00.
(ii) Ten percent of the health maintenance organization's subscription revenue.
(iii) Three months' uncovered expenditures.
(4) The commissioner shall take into account the risk-based capital requirements as developed by the national association of insurance commissioners in order to determine adequate compliance with section 403 under this section.
History: Add. 2000, Act 252, Imd. Eff. June 29, 2000
Popular Name: Act 218
Popular Name: HMO