Each HMO which desires to transfer ownership of more than 5% of the stock or ownership interest or control in the HMO shall not do so without first submitting the proposed plan to the Commissioner for review and approval or disapproval in accordance with Section 27-29-3, Code of Ala. 1975. Any change of control shall be governed by the disclosure requirements of Alabama Insurance Regulation Chapter 482-1-055 entitled "Insurance Holding Company Registration and Disclosure."

The HMO shall promptly furnish the Commissioner written notice within thirty days of their election or appointment of any change of personnel among the directors or principal officers of the HMO.

Any management contractor who shall manage the financial affairs, investment affairs or any of the health care activities of the HMO shall be subject to prior approval by the Commissioner with the advice of the State Health Officer. In no instance shall the board of directors of the HMO relinquish the right to dismiss the management contractor for failure to perform his required duties.

Management contracts shall be effective only with the prior written consent of the Commissioner in accordance with Section 27-21A-4 supra and shall include the following:

1. (1) A description of the proposed role of the HMO governing authority during the term of the proposed management contract. The description shall clearly reflect retention by the governing authority of the HMO of ongoing responsibility for statutory and regulatory compliance;
2. (2) A provision that clearly recognizes that the responsibilities of the governing authority of the HMO are in no way obviated by entering a management contract and that any powers not specifically delegated to the management contractor through the provisions of the contract remain with the governing authority of the HMO;
3. (3) A plan for assuring maintenance of the fiscal stability, the level of services provided and the quality of care rendered by the HMO during the term of the management contract;
4. (4) A provision that annual reports on the financial operations and any other operational data requested by the governing authority of the HMO, the State Health Officer or the Commissioner will be provided by the management contractor;
5. (5) A provision stating that the management contract approved by the Commissioner shall be the sole agreement between the management contractor and the governing authority of the HMO for the purpose of management of the HMO and payment to the management contractor for management services, and that any amendments or revisions to the management contract shall be effective only with the prior written consent of the Commissioner; and

6. (6) Specification of payment terms that are reasonable and do not jeopardize the financial solvency of the HMO.

   If these management contracts are not disapproved within thirty (30) days of filing they shall be deemed approved.

Author: Commissioner of Insurance

Statutory Authority: Code of Ala. 1975, §§27-2-17, 27-21A-19.

History: New Rule: Filed April 22, 1987; effective May 8, 1987. Filed for codification in the Alabama Administrative Code by the Department of Insurance on April 23, 2004, pursuant to the Code of Ala. 1975, §27-7-43.