§ 58-67-115. Hold harmless agreements or special deposit.
§ 58‑67‑115. Holdharmless agreements or special deposit.
(a) Unless the HMOmaintains a special deposit in accordance with subsection (b) of this section,each contract between every HMO and a participating provider of health careservices shall be in writing and shall set forth that in the event the HMOfails to pay for health care services as set forth in the contract, thesubscriber or enrollee shall not be liable to the provider for any sums owed bythe HMO. No other provisions of such contracts shall, under any circumstances,change the effect of such a provision. No participating provider, or agent,trustee, or assignee thereof, may maintain any action at law against asubscriber or enrollee to collect sums owed by the HMO.
(b) In the event thatthe participating provider contract has not been reduced to writing or that thecontract fails to contain the required prohibition, the HMO shall maintain aspecial deposit in cash or cash equivalent as follows:
(1) Every HMO that hasincurred uncovered health care expenditures in an amount that exceeds tenpercent (10%) of its total expenditures for health care services for theimmediately preceding six months, shall do either of the following:
a. Calculate as of thefirst day of every month and maintain for the remainder of the month, cash orcash equivalents acceptable to the Commissioner, as an account to cover claimsfor uncovered health care expenditures at least equal to one hundred twentypercent (120%) of the sum of the following:
1. All claims for uncoveredhealth care expenditures received for reimbursement, but not yet processed; and
2. All claims foruncovered health care expenditures denied for reimbursement during the previous60 days; and
3. All claims foruncovered health care expenditures approved for reimbursement, but not yetpaid; and
4. An estimate foruncovered health care expenditures incurred, but not reported; and
5. All claims foruncovered emergency services and uncovered services rendered outside theservice area.
b. Maintain adequate insurance,or a guaranty arrangement approved in writing by the Commissioner, to pay forany loss to enrollees claiming reimbursement due to the insolvency of the HMO.The Commissioner shall approve a guaranty arrangement if the guaranteeingorganization has been in operation for at least 10 years and has a net worth,including organization‑related land, buildings, and equipment, of atleast fifty million dollars ($50,000,000); unless the Commissioner finds thatthe approval of such guaranty may be financially hazardous to enrollees. Inorder to qualify under the terms of this subsection, the guaranteeingorganization shall (i) submit to the jurisdiction of this State for actionsarising under the guarantee; (ii) submit certified, audited annual financial statementsto the Commissioner; and (iii) appoint the Commissioner to receive service ofprocess in this State.
(2) Whenever thereimbursements described in this subsection exceed ten percent (10%) of theHMO's total costs for health care services over the immediately preceding sixmonths, the HMO shall file a written report with the Commissioner containingthe information necessary to determine compliance with sub‑subdivision(b)(1)a. of this section with its financial statements filed pursuant to G.S.58‑2‑165. Upon an adequate showing by the HMO that the requirementsof this section should be waived or reduced, the Commissioner may waive orreduce these requirements to such an amount as he deems sufficient to protectenrollees of the HMO consistent with the intent and purpose of this Article.
(3) Any cash or cashequivalents maintained pursuant to the terms of this section shall bemaintained as a special deposit controlled by and administered by theCommissioner in accordance with the provisions of G.S. 58‑5‑1. (1989, c. 776, s. 13; 2005‑215,s. 19.)