3 CCR 702-4
DEPARTMENT OF REGULATORY AGENCIES LIFE, ACCIDENT AND HEALTH, Series 4-7 3 CCR 702-4 Series 4-7 [Editor’s Notes follow the text of the rules at the end of this CCR Document.] _________________________________________________________________________ Regulation 4-7-1 HEALTH MAINTENANCE ORGANIZATIONS Section 1 Authority Section 2 Scope and Purpose Section 3 Applicability Section 4 Definitions Section 5 Authorization of Insures and Nonprofit Hospital, Medical-Surgical and Health Service Corporations Section 6 Application for Licensure Section 7 Organizational Changes Section 8 Fidelity Bond Section 9 Reinsurance Section 10 Subordinated Debentures Section 11 Guarantees for Uncovered Expenditures Section 12 Provider Agreements Section 13 Administrative and Other Service Agreements Section 14 Administrative Reports Section 15 Financial Reports Section 16 Property Acquisitions Section 17 Confidentiality Section 18 Severability Section 19 Enforcement Section 20 Effective Date Section 21 History Section 1 Authority This regulation is promulgated under the authority of §§ 10-1-109, 10-16-109, 10-16-111, and 10-16- 403(2)(b), C.R.S.
Section 2 Scope and Purpose The purposes of this regulation are to provide the requirements for licensure as a health maintenance organization (HMO) and establish standards for HMO organization and operations. Section 3 Applicability This regulation applies to licensed HMOs or persons seeking to become licensed to operate an HMO in Colorado.
Section 4 Definitions A. “NAIC” means, for the purposes of this regulation, the National Association of Insurance Commissioners.
B. “Material modification of the plan of operations” means and includes, for the purposes of this regulation, a change in service area, or the initial entrance or withdrawal from the Medicare, Medicaid or commercial market, or any other transaction or series of related transactions which the HMO could reasonably predict would involve a net increase or decrease of 20% or more in the number of HMO enrollees or result in a 20% increase or decrease in the HMO’s net worth over a 12 month period based upon projected financial statements. Section 5 Authorization of Insurers and Nonprofit Hospital, Medical-Surgical and Health Service Corporation A. Any licensed health carrier may apply to the Division of Insurance to become licensed as an HMO, as defined in part 1 of article 16 of title 10, C.R.S. If a licensed health carrier is authorized to hold a certificate of authority to operate as an HMO, the requirements of part 4, article 16, title 10, C.R.S., will apply in addition to the other requirements for its health carrier certificate of authority.
B. Nothing herein shall be deemed to amend the intent or provisions of article 20 of title 10, C.R.S. Any HMO product offered by a licensed health carrier is not provided coverage and protection by the Colorado Life and Health Insurance Protection Association Act (§ 10-20-103(8), C.R.S.). Section 6 Application for Licensure Any person seeking licensure as an HMO shall submit two copies of an application to the Corporate Affairs Section of the Division of Insurance (Division). Applications shall include all items as required under § 10-16-401(4), C.R.S., and the following:
A. A list of all persons who will ultimately control the proposed HMO. If the proposed HMO is organized as a stock company, the application must identify all persons who directly or indirectly will own or control ten percent or more of the outstanding stock.
B. Biographical sketches of all the official persons of the organization, including all members of the board of directors, board of trustees, executive committee, or other governing board or committee, the principal officers in the case of a corporation, and the partners or members in the case of a partnership or association, officers, directors, organizers and controlling individuals. Biographical information shall be submitted on the NAIC Biographical Affidavit (form available upon request). A complete fingerprint set, as may be obtained from local law enforcement sources may be requested at the discretion of the Commissioner. Any person who has been involved with any adverse administrative action within the prior five years shall disclose such activity in the biographical affidavit.
C. The addresses of company offices and the HMO functions to be performed by each office, including sufficient information to verify compliance with the provisions of § 10-3-128, C.R.S.
D. A statement as to whether the HMO will be seeking Federal qualification.
E. Current financial information and three (3) year financial projections, including balance sheets and income statements, conforming to the format of the NAIC convention blank. The projections shall also contain projected member-month enrollment at calendar year end and a detailed summary of all assumptions used to generate the projections.
F. A description of the method of marketing including, at a minimum, proposed advertisements, solicitation material, use of brokers and agents, use of HMO staff, and marketing research that will indicate the ability to meet the enrollment projections.
G. Proposed enrollment and/or application forms.
H. An actuarial opinion supporting the proposed premiums or rates to be charged and the underlying actuarial report reflecting the methodology and assumptions used in arriving at the rates used within the projections. The opinion and report must be prepared using generally accepted actuarial standards and principles.
I. A description of the geographic service area by county. Where the service area will be a part of a county, appropriate zip codes may be used to describe the service area.
J. A list of contracting providers, by specific geographic area and by specialty within each geographic area along with a map clearly indicating the service area. If there are no providers or specialty providers within a specific geographic service area, a separate description of the method of providing covered services in said service area, or part thereof, shall be provided.
K. An access plan for each separate network.
L. A description of the provider network arrangements, including copies of specimen contracts. This description should include the due diligence procedures to be performed by the HMO to ensure performance of the services by the participating providers.
M. A detailed description of the sources of funding of the HMO.
N. The filing fees as required by § 10-3-207, C.R.S.
O. Evidence that the applicant meets the minimum surplus requirements found at § 10-16-411, C.R.S.
P. Evidence that the applicant meets the statutory deposit requirements found at § 10-16-412, C.R.S.
Q. Evidence that the applicant meets the requirements for the maintenance of a complaint system as found at § 10-16-409, C.R.S.
R. Evidence that the applicant meets the requirements for establishing and maintaining an ongoing quality assurance program as found at § 10-16-402(1)(b)(II), C.R.S.
S. An application for licensure as a foreign HMO must also include the following:
1. The most recent financial examination report conducted by the state of domicile.
2. The most recent market conduct report issued concerning the applicant 3. An original certificate of compliance or a certified copy of the certificate of authority from the state of domicile referencing the approved lines of authority.
4. An explanation of any limitations imposed by the state of domicile.
5. Disclosure of any administrative action currently pending or taken against the company within the last five (5) years.
Section 7 Organizational Changes A. An HMO requesting a material modification in the plan of operations on file with the Division, shall provide two copies of the following:
1. The financial statement for the HMO prepared within 90 days prior to the date of request for a modification in the plan of operations.
2. To the extent applicable with regard to the modification, a list of providers under contract or who have committed to contracting with the HMO and a description of the provider network arrangements, including specimen copies of provider contracts. This description shall provide due diligence procedures to be performed by the HMO to ensure performance of the services by the participating providers.
3. Three year financial projections disclosing the impact of the modification in the HMO operations. Include balance sheets and income statements which conforms to the format of the NAIC convention blank. The projections shall also contain projected member- month enrollment at calendar year end and a detailed summary of all assumptions used to generate the projections.
4. To the extent applicable with regard to the modification, a Memorandum and certification by a qualified actuary, supporting the proposed premiums or rates to be charged in the new service area(s) or for the new market.
B. An HMO requesting to modify its approved plan of operations on file with the Division by withdrawing from the geographic service area or a market, shall provide two copies of the following:
1. A statement as to why the HMO is withdrawing from a service area or market.
2. Evidence that there will no longer be any enrollment in the portion of the service area at the time of the proposed withdrawal. Such elimination of enrollment in the affected area may be accomplished by nonrenewal according to Colorado statutes and regulations or by any other means acceptable to the Commissioner.
3. An affidavit that the HMO will honor existing coverage for any enrollee hospitalized on the date of such withdrawal from the portion of the geographic service until the date of discharge or arrangements are made for alternative coverage.
C. Changes to the basic organizational documents, such as articles of incorporation and related documents, shall be filed with the Corporate Affairs Section and approved by the Commissioner before filing appropriate documents with the Colorado Secretary of State. Section 8 Fidelity Bond Pursuant to § 10-16-405, C.R.S., the funds received from enrollees must be treated in a fiduciary capacity. In order to protect the HMO enrollees from misuse of enrollee funds, an HMO licensed in Colorado shall have fidelity coverage, meeting the requirements of Regulation 3-1-1 (3 CCR 702-3), for all officers, directors and employees who have access to the HMO funds. Section 9 Reinsurance A. An HMO may enter into reinsurance agreements under which its risks are indemnified by an insurer. Such agreements must conform to the provisions of §10-3-701 et seq., C.R.S., and Colorado Insurance Regulations 3-3-3 and 3-3-4 (3 CCR 702-3).
B. Section 10-3-701 et seq, C.R.S., provides that an HMO may assume risks from another HMO provided it is licensed or authorized to write the type of coverage assumed.
C. An HMO may only assume contract obligations from another HMO with the Commissioner's prior written approval. Any assumption transaction shall follow the provisions of § 10-3-701, et seq., C.R.S., and Colorado Insurance Regulation 3-3-1 (3 CCR 702-3). The assuming HMO must be licensed in the ceding HMO’s service area and must demonstrate the ability to service the proposed acquisition and continue to meet compliance with the availability, accessibility and quality of care requirements.
Section 10 Subordinated Debentures A. An HMO may enter into loans or similar obligations, for cash or liquid securities received, which may be treated as surplus, pursuant to § 10-16-411(1), C.R.S. These arrangements shall be in a form acceptable to the Commissioner and must comply with the following:
1. Any such obligation must be approved by the Commissioner prior to entering into the final contract.
2. The contract must contain language that it shall not be paid in whole or in part, whether as to principal or interest, or converted, without the Commissioner's prior written approval.
3. The contract must contain language that repayment may only be made from available funds in excess of the net worth required by the Division of Insurance.
B. No loan or advance made under the provisions of this section or interest accruing thereon shall form a part of the legal liabilities of the HMO until authorized for payment by the Commissioner, but, until such authorization, all statements published by the HMO or filed with the Commissioner shall show the amount thereof then remaining as a special surplus account. Section 11 Guarantees for Uncovered Expenditures An HMO may have financial arrangements under which uncovered expenditures are guaranteed by a third party in the event of insolvency or nonpayment by the HMO. Such arrangements require prior written approval by the Commissioner. At a minimum, the following criteria must be met:
A. The guarantor must demonstrate a net gain from operations or positive income for each of the five years prior to entering into the guarantee.
B. The guarantee must contain a provision that if the Commissioner determines that the HMO cannot meet its obligations as they become due and payable, the Commissioner may, without notice, call on the guarantor to immediately meet the HMO’s applicable net worth requirements.
C. A guarantee may not provide for fees or interest charges for placing the guarantee, keeping the guarantee in place or terminating the guarantee. Agreements with such provisions will be considered subordinated debentures or loans.
D. The guarantor must maintain a minimum net worth equal to the greater of $5,000,000 (five million dollars) or 6 months of the operating expenses of the HMO in excess of the guaranteed amount. For the purposes of this Subsection, net worth shall be limited to tangible assets less liabilities.
E. The guarantor must demonstrate that it has the experience, financial strength and access to capital to serve as a guarantor.
F. The guarantor must agree to file audited financial statements with the Division of Insurance for each year the guarantee is in place. Upon initial filing for approval for the guarantee, the most recent audit report must be submitted.
Section 12 Provider Agreements A. An HMO must establish that executed agreements between the HMO and the providers exist prior to licensure or granting of approval for an increase in geographic service area. Provider agreements must be maintained in Colorado in the HMO's administrative office or other designated office for examination and shall be made available to the Commissioner upon request.
B. In order to qualify as a covered expenditure, a provider, intermediary, IPA or other provider group contract or provider subcontract must have a “hold harmless” provision which substantially complies with the following:
1. Provider agrees that in no event, including but not limited to nonpayment by the HMO, insolvency of the HMO or breach of this agreement, shall the provider bill, charge, collect a deposit from, seek compensation, remuneration or reimbursement from, or have any recourse against a subscriber, an enrollee or persons (other than the HMO) acting on his/their behalf for services provided pursuant to this agreement. This provision does not prohibit the provider from collecting supplemental charges or copayments or fees for uncovered services delivered on a 'fee-for-service' basis to HMO subscribers/enrollees.
2. Provider agrees that this provision shall survive the termination of this agreement, for authorized services rendered prior to the termination of this agreement, regardless of the cause giving rise to termination and shall be construed to be for the benefit of the HMO subscriber/enrollees. This provision is not intended to apply to services provided after this agreement has been terminated.
3. Provider agrees that this provision supersedes any oral or written contrary agreement now or existing hereafter entered into between the provider and the subscriber, enrollee, or persons acting on their behalf insofar as such contrary agreement relates to liability for payment of services provided under the terms and conditions of this agreement.
4. Any modification, addition, or deletion to this provision shall become effective on a date no earlier than thirty (30) days after the Commissioner has received written notification of proposed changes.
C. Every contract between an HMO and a provider shall contain a provision clearly setting forth the HMO’s reimbursement arrangements with the participating provider, including any financial risk assumed by the participating provider. An HMO shall maintain evidence that it took reasonable steps to ascertain that the provider understands such arrangements and that the HMO has determined that the provider is capable of undertaking the financial risk assumed.
D. HMOs may only transfer financial risk to providers for services which the provider performs, or services which such provider controls, directs or influences. Out of network emergency services are not controlled, directed or influenced by the provider and financial risk for such services may not be transferred. Any individual arrangement may be submitted to the Commissioner to be reviewed on a case by case basis to determine its acceptability.
E. An HMO shall have available a continuous program and procedure for review of providers ensuring their ability to provide contracted services. At a minimum this program must include the following:
1. Financial review of intermediaries and providers accepting risk for services which they do not control, direct or influence directly from the HMO.
2. Review all provider subcontract specimen forms for compliance with applicable insurance statutes and regulations, availability of services and evaluation of risk transfers.
3. Procedures for review of the timely and accurate compensation of providers pursuant to contract.
4. Review of quality management, utilization review, credentialing and other health care management services, if being conducted by the intermediary, provider or subcontracting provider. The procedures and practices used must be the same as those approved for the HMO by the Executive Director of the Colorado Department of Public Health and Environment.
5. Procedures for assuring continuity of care and for making payments to subcontracting providers in the event of the insolvency of an intermediary or provider 6. The reviews in subsections 1 through 5, above, shall occur upon initial contracting with the intermediary, provider or subcontracting provider. Subsequent reviews shall be undertaken at least annually. Additional reviews should be undertaken as necessary based upon: (1) the results of previous reviews of the intermediary, provider or subcontracting provider; or (2) complaints from enrollees or providers or (3) other information which may impact the intermediary’s ability to provide services or pay subcontractors.
Section 13 Administrative and Other Service Agreements A. An HMO may contract for the performance of administrative functions. Any contract for administrative functions shall contain the following:
1. Ninety (90) days written notice of cancellation to the Commissioner;
2. A provision that the contract may not restrict the HMO's Board of Directors from appointing, removing or changing officers or employees of the HMO;
3. A statement of the administrator’s compensation, duties and responsibilities;
4. State that all books, records, assets, and liabilities of the HMO shall, at all times, remain the property of the HMO; and 5. If the HMO contracts for Electronic Data Processing (EDP) and/or Management Information Systems (MIS), a provision providing appropriate access to the system upon examination by the Commissioner, and a mechanism under which the system is available to the HMO or its successor upon insolvency of the HMO, or termination or cancellation of the contract.
B. All management agreements and any material amendments thereto shall be filed with the Division of Insurance for review 30 days prior to the effective date. Agreements filed in compliance with §10-3-805(1)(b)(IV), C.R.S., need not be filed under this regulation. For purposes of this regulation, management agreements mean any agreements between the HMO and any entity or person not employed by the HMO for the purpose of managing the day to day operations of the HMO.
C. An HMO may offer administrative or other services to another person to the extent not inconsistent with the provisions of article 16 of title 10, C.R.S., provided that:
1. The provider network is sufficient to absorb any enrollment from such action and the availability, accessibility and quality of the services to the HMO’s enrollees are not impaired;
2. The arrangement entered into may be terminated by the HMO if such obligation substantially interferes with the HMO's operations or its ability to maintain compliance with law; and 3. The contract shall constitute the HMO's entire service obligation and shall be filed with the Commissioner.
Section 14 Administrative Reports An HMO shall provide the following reports to the Commissioner no less frequently than annually A. A report that compiles, evaluates, and provides statistics relating to the cost of the HMO’s operations, including the pattern of utilization of its services, and the availability and accessibility of services, as required by § 10-16-402(1)(b)(III), C.R.S.; and B. A report containing the information on the HMO’s complaint system as required by § 10-16- 409(1)(b), C.R.S.
Section 15 Financial Reports A licensed health carrier also licensed as an HMO shall include the following exhibits of the HMO convention blank detailing their HMO activities as appendices to its NAIC convention blank filing:
A. The income and loss statement for total business and Colorado business;
B. The enrollment report for total business and for Colorado business;
C. The schedule reflecting health care receivables for total business and Colorado business;
D. The claims payable analysis for total business and Colorado business;
E. The summary of transactions with providers for total business and Colorado business; and F. Any other form of the NAIC blank the Commissioner requires to analyze the business of the HMO including, but not limited to, electronic filing.
Section 16 Property Acquisitions Section 10-16-403(1), C.R.S., provides that an HMO may acquire property which may reasonably be required for its administrative offices or for such other purposes as may be necessary to accomplish the business of the organization. The following rules apply in order to meet the requirements of § 10-16- 403(2), C.R.S., regarding the prior approval of property purchases. Any property acquired without filing a notification, other than as outlined herein, shall be nonadmitted for statutory accounting purposes.
A. For acquiring real property, e.g. hospitals, medical facilities, nursing care and intermediate care facilities, an HMO must file, at least 30 days prior to acquisition, notice of its intent to acquire property. The filing shall include a description of:
1. The nature of the real property;
2. The location of the real property;
3. Method of acquisition (build new facility, remodel existing facility, etc.);
4. How the property contributes to the accomplishment of the nature of the HMO's business; and 5. An estimate of the amount to be expended and source of funding (i.e. loans, operating funds, etc.).
B. Electronic data processing equipment and software shall be admitted and valued in accordance with the statements of statutory accounting principles contained in the National Association of Insurance Commissioners Accounting Practices and Procedures Manual.
C. The HMO may acquire property which is other than real property and which is used in the direct delivery of health care services, such as pharmaceuticals and surgical supplies, durable medical equipment, furniture, medical equipment and fixtures, and leasehold improvements in health care facilities.
1. Furniture, medical equipment and fixtures and leasehold improvements in health care facilities must meet the following conditions in order to qualify as an admitted asset
2. The aggregate admitted value of all property other than real property is limited to the lesser of 5% of assets or 25% of surplus.
3. The Commissioner may waive the aggregate limitations of subsection 2 above. A request for waiver must include:
4. Property other than real property shall be carried at the lesser of cost at the time of request less accumulated depreciation or the market value at the time of valuation, unless it is an asset whose method of valuation is specified in the insurance laws, regulations, or nationally recognized insurance statutory accounting principles.
5. The admissibility of property other than real property is subject to review and restriction of admissibility when the net worth of an HMO, less the admitted value of property subject to this section, is below the statutory minimum net worth as required by § 10-16-411, C.R.S., or if such property will cause a hazardous financial condition as determined by Colorado Insurance Regulation 3-1-7 (3 CCR 702-3).
6. A licensed health carrier, also authorized to hold a certificate of authority directly to operate an HMO, is restricted to the property which is admitted under rules applicable for the certificate of authority of the licensed health carrier.
D. The admitted value of property, other than real property acquired and admitted prior to January 1, 2001, which is not used in the direct delivery of health care services, may be phased out over a period not to exceed three years. The rate for phasing out the admitted value of such property shall be documented in the HMO's records, available for examination by the Division. Section 17 Confidentiality A. Except as set forth in statute or regulation, documents filed with the Division of Insurance shall generally be considered public records under the Public Records Act, § 24-72-201, et. seq., C.R.S.
B. If an HMO considers a document to be confidential, it must submit the document under separate cover or in a file clearly labeled “CONFIDENTIAL” and a completed Confidentiality Index explaining why the document is considered confidential.
C. Documents found to be confidential by the Division of Insurance, will be maintained in a separate, confidential file and will not be released to the general public for inspection or copying. Section 17 Severability If any provision of this regulation or the application of it to any person or circumstance is for any reason held to be invalid, the remainder of this regulation shall not be affected. Section 18 Enforcement Noncompliance with this regulation may result in the imposition of any of the sanctions made available in the Colorado statutes pertaining to the business of insurance, or other laws, which include the imposition of civil penalties, issuance of cease and desist orders, and/or suspensions or revocation of license, subject to the requirements of due process.
Section 19 Effective Date This amended regulation shall become effective on October 1, 2017. Section 20 History Originally issued as regulation 74-21 effective 1974 Re-codified as Regulation 4-7-1 effective December 1, 1993 Amended regulation effective September 1, 1999 Amended regulation effective July 1, 2001 Amended regulation effective January 31, 2003 Amended regulation effective October 1, 2012 Amended regulation effective October 1, 2017 Regulation 4-7-2 CONCERNING THE LAWS REGULATING HEALTH MAINTENANCE ORGANIZATION BENEFIT CONTRACTS AND SERVICES IN COLORADO Section 1 Authority Section 2 Scope and Purpose Section 3 Applicability and Scope Section 4 Definitions Section 5 Requirements for Benefit Contracts and Evidence of Coverage Section 6 Prohibited Practices Section 7 Services Section 8 Other Requirements Section 9 Severability Section 10 Enforcement Section 11 Effective Date Section 12 History Section 1 Authority This rule is promulgated and adopted by the Commissioner of Insurance under the authority of § 10-16- 109, C.R.S.
Section 2 Scope and Purpose The purpose of this regulation is to provide reasonable standards for the terms and provisions contained in Health Maintenance Organizations’ (“HMOs”) benefit contracts and evidences of coverage. Section 3 Applicability and Scope This regulation shall apply to all HMOs that are required to obtain or maintain a certificate of authority in this state. This regulation shall apply to all benefit contracts and evidences of coverage that are issued or renewed on or after the effective date of this regulation. In the event of conflict between the provisions of this regulation and the provisions of any earlier regulation issued by the Commissioner, the provisions of this regulation shall be controlling as to HMOs.
Section 4 Definitions No contract or evidence of coverage delivered or issued for delivery to any person by an HMO required to obtain a certificate of authority in this state shall contain definitions respecting the matters set forth below and in § 10-16-102, C.R.S., unless such definitions comply with the requirements of this section. Definitions other than those set forth herein and in § 10-16-102, C.R.S., may be used as appropriate providing that they do not contradict these requirements. As used in this regulation and for the purpose of any terms used in a benefit contract of evidence of coverage:
A. “Copayment” means, for the purposes of this regulation, the predetermined amount, whether stated as a percentage or a fixed dollar, an enrollee must pay, to receive a specific service or benefit.
B. “Deductible” means, for the purposes of this regulation, the amounts to be paid by the enrollee for covered services, other than a co-payment, before the enrollee is entitled to benefits from a health benefit plan.
C. “Emergency services” means, for the purposes of this regulation, health care services provided in connection with any event that a prudent lay person would believe threatens his or her life or limb in such a manner that a need for immediate medical care is created to prevent death or serious impairment of health.
D. “Group” means, for the purposes of this regulation, a) a bona fide employer covering employees of such employer for the benefit of persons other than the employer; or b) an association, including a labor union, which has a constitution and bylaws and which is organized and maintained in good faith for purposes other than that of obtaining insurance.
E. “Group contract” means, for the purposes of this regulation, a contract for health care services, which by its terms limits eligibility to members of a specified group. The group contract may include coverage for dependents.
F. “Group contractholder” means, for the purposes of this regulation, the person to which a group contract has been issued.
G. “HMO service area” means, for the purposes of this regulation, the geographical area within which the HMO is authorized to provide or arrange for health care services that are available and accessible to enrollees and may include contracted providers physically located across state or county lines.
H. “Individual contract” or “nongroup contract” means, for the purposes of this regulation, a contract for health care services issued to and covering an individual or a family that is not a group.
I. “Out-of-area services” means, for the purposes of this regulation, the health care services that an HMO covers when its enrollees are outside of the enrollee service area.
J. “Point-of-service plan contract” means, for the purposes of this regulation, a Health Maintenance Organization contract which includes coverage for both in-network services and coverage for services provided by non-contracted providers. The term “point-of-service plan contract” shall also apply to a plan contract where the indemnity coverage or service is underwritten by a non- HMO carrier in this state and is offered in conjunction with an HMO contract.
K. “Primary care physician” means, for the purposes of this regulation, a physician designated by the enrollee, subject to the policies and procedures of the HMO, who supervises, coordinates, and provides initial and basic care to members, initiates their referral for specialist care and maintains continuity of patient care.
L. “Subscriber” means, for the purposes of this regulation, the individual whose employment or other status, except for family dependency, is the basis for eligibility for enrollment in the HMO.
M. “Supplemental health care services” means, for the purposes of this regulation, any health care services other than basic health care services as defined in § 10-16-102(4), C.R.S.
N. “Temporarily absent” means, for the purposes of this regulation, circumstances where the enrollee has left the HMO's service area but intends to return within a reasonable period of time, such as a vacation trip.
O. “Urgently needed services” means, for the purposes of this regulation, covered services which enrollees require in order to prevent a serious deterioration in their health while they are temporarily absent from the enrollee’s service area.
P. “Variable Copayment” means, for the purposes of this regulation, a copayment that varies based on the enrollee’s use of certain providers.
Q. “Variable Deductible” means, for the purposes of this regulation, a deductible that varies based on the enrollee’s use of certain providers.
Section 5 Requirements for Benefit Contracts and Evidences of Coverage Each enrollee shall be entitled to receive an individual contract and/or evidence of coverage. Each group contractholder shall be entitled to receive a group contract and/or evidence of coverage. Group contracts, individual contracts and evidences of coverage shall be delivered or issued for delivery to enrollees or group contractholders within a reasonable time after enrollment, but not more than fifteen working days from the later of the effective date of coverage or the date on which the HMO is notified of enrollment. The contract and/or evidence of coverage shall include the following:
A. HMO Information The contract and/or evidence of coverage shall contain the name, address and telephone number of the HMO and shall describe how services may be obtained. A toll free or collect call phone number within the service area for calls, without charge to enrollees, to the HMO’s administrative office shall be made available and disseminated to enrollees to adequately provide telephone access for member services, problems or questions.
B. Entire Contract The contract shall contain a statement that the contract, evidence of coverage, all applications and any amendments thereto shall constitute the entire agreement between the parties.
C. Term of coverage 1. The contract and/or evidence of coverage shall contain the time and date or occurrence upon which coverage takes effect and include any applicable waiting periods.
2. The contract and/or evidence of coverage shall contain the time and date or occurrence upon which coverage will terminate.
D. Benefits and Services within the HMO’s Service Area The contract and/or evidence of coverage shall contain a specific description of benefits and services available within the HMO’s service area.
E. Emergency Care Services The contract and/or evidence of coverage shall contain a specific description of emergency services available twenty-four hours a day, seven days a week, including disclosure of how emergency care services will be accessible within the HMO’s service area by affiliated providers and nonaffiliated providers.
F. Out of Area Benefits and Services The contract and/or evidence of coverage shall contain a specific description of benefits and services available out of the HMO’s service area including situations where balance billing could apply, variable deductibles, variable copayments and notice if individuals may need to travel into the HMO’s service area to receive covered health benefits.
G. Cancellation or Termination The contract and/or evidence of coverage shall contain the conditions upon which cancellation or termination may be effected by the HMO or the enrollee.
H. Renewal The contract and/or evidence of coverage shall contain the conditions for, and any restrictions upon, the enrollee's right to renewal.
I. Reinstatement The contract and/or evidence of coverage shall contain the conditions for, and any restrictions upon, the enrollee's right to reinstate.
J. Claims The contract and/or evidence of coverage shall contain procedures for filing claims that include:
1. any required notice to the HMO;
2. if any claim forms are required, how, when and where to obtain and submit them;
3. any requirements for filing proper proofs of loss;
4. any time limit of payment of claims;
5. notice of any requirement for resolving disputed claims including arbitration; and 6. a statement of restrictions, if any, on assignment of sums payable to the enrollee by the HMO.
K. Complaint System In compliance with § 10-16-409, C.R.S., the contract and/or evidence of coverage shall contain a description of the HMO's method for resolving enrollee complaints, incorporating procedures to be followed by the enrollee in the event any dispute arises under the contract.
L. Coordination of Benefits A group contract and/or evidence of coverage must contain a provision for coordination of benefits that shall be consistent with Colorado Insurance Regulation 4-6-2, 3 CCR 702-4. An individual contract and/or evidence of coverage may have an “insurance with other insurers provision.” Additionally, an HMO must coordinate benefits with private passenger automobile coverage, as required under § 10-4-641, C.R.S.
M. Point-of-service plan contract There is no requirement that “point-of-service” coverage be offered to groups or individuals. However, if an HMO offers a point-of-service plan, it must be offered to all individuals and/or groups that qualify for the point-of-service plan, based upon the HMO’s underwriting standards. If the point-of-service plan is offered to a group, it must be offered to all eligible members of that group. Additionally, an employer may set standards as to which employees are eligible for “point- of-service” coverage.
1. Point-of-service plan mandatory contract provisions. A point-of-service plan contract must, at a minimum:
2. Point-of-service plan optional contract provisions.
3. Point-of-service plan limitations.
4. An HMO must comply with the form and rate filing requirements contained in statute and regulation. In complying with these statutes and regulations, the HMO will:
5. Disclosure.
N. Indemnity Benefits Basic health care services are required to be offered through providers that are contracted or employed by the HMO. Coverage offered by non-contracted providers may be provided on an indemnity basis, as permitted by law.
Section 6 Prohibited Practices Unfair discrimination A. No HMO shall unfairly discriminate against any enrollee based on the age, sex, race, color, creed, national origin, ancestry, religion or marital status. However, nothing shall prohibit an HMO from setting rates or establishing a schedule of charges in accordance with relevant actuarial data.
B. No HMO shall expel or refuse to offer a continuation or conversion contract to individual members of a group based on the health status or health care needs of the individual enrollee or member. Section 7 Services A. Out-of-Area Services and Benefits 1. Out-of-area services shall be subject to copayment or deductible requirements set forth in Subsection C of Section 8 of this regulation.
2. When an enrollee is temporarily absent from the HMO’s service area, an HMO shall provide benefits for reimbursement for emergency care or urgent care services, or, at the HMO's discretion, transportation which is medically necessary and appropriate under the circumstances to return the enrollee to an HMO provider, subject to the following conditions:
For urgently needed services, the HMO is notified prior to the commencement of care, unless it is shown that it was not reasonably possible to communicate with the HMO in such time limits.
B. Supplemental Health Care Services In addition to the basic health care services as defined in § 10-16-102(4), C.R.S., an HMO may offer to its enrollees any supplemental health care services it chooses to provide. Limitations as to time and cost may vary from those applicable to basic health care services. Section 8 Other Requirements A. Description of Providers 1. An HMO shall provide its enrollees with access to a list of the names and locations of all of its current primary care physicians and hospitals in an enrollee’s service area, no later than the time of enrollment or the time the contract and evidence of coverage are issued and upon request thereafter.
2. Any list of providers shall contain a notice regarding the availability of the listed primary care physicians. Such notice shall be in not less than ten-point type and be placed in a prominent place on the list of providers. The notice shall contain the following or similar language:
B. Description of the Service Area A HMO shall provide its enrollees with a description of the HMO's service area no later than the time of enrollment or the time the contract and evidence of coverage is issued and upon request thereafter. If the description of the HMO's service area is changed, the HMO shall provide, at such time, a new description of the HMO’s service area to its enrollees.
C. Copayments or Deductibles 1. An HMO may require copayments and/or deductibles of enrollees as a condition for the receipt of specific health care services. Copayments and deductibles for basic health care services shall be shown in the contract and/or evidence of coverage or an addendum thereof as a percentage or as a specified dollar amount.
2. Copayments or deductibles can vary by provider as a means of encouraging an enrollee to obtain services from a particular provider.
D. Complaint System 1. A complaint system shall be established and maintained by an HMO to provide reasonable procedures for the prompt and effective resolution of written complaints.
2. An HMO shall provide complaint forms to be given to enrollees who wish to register written complaints. Such forms shall include the address and telephone number to which complaints must be directed and shall specify any required time limits imposed by the HMO.
3. The complaint system shall provide for (a) written acknowledgment of complaints and (b) complaints to be resolved or to have a final determination of the complaint by the HMO complaint system within a reasonable period of time, but not more than ninety days from the date the complaint is registered. This period may be extended (a) in the event of a delay in obtaining the documents or records necessary for the resolution of the complaint, or (b) by the mutual written agreement of the HMO and the enrollee.
4. Membership may not be terminated solely as a result of filing a complaint against the HMO.
5. If an enrollee's complaints and grievances may be resolved through a specified arbitration agreement, the enrollee shall be advised in writing of his rights and duties under the agreement at the time the complaint is registered. Any such agreement must be accompanied by a statement setting forth in writing the terms and conditions of binding arbitration. Any HMO that makes such binding arbitration a condition of enrollment must fully disclose this requirement to its enrollees in the contract and evidence of coverage.
Section 9 Severability If any provision of this regulation or the application of it to any person or circumstances is for any reason held to be invalid, the remainder of the regulation shall not be affected. Section 10 Enforcement Noncompliance with this regulation may result in the imposition of any of the sanctions made available in the Colorado statutes pertaining to the business of insurance, or other laws, which include the imposition of civil penalties, issuance of cease and desist orders, and/or suspensions or revocation of license, subject to the requirements of due process.
Section 11 Effective Date This regulation is hereby amended shall be effective for policies issued or renewed on January 1, 2014. Section 12 History Originally issued as Regulation 90-6, Effective October 1, 1990. Amended Regulation, Effective December 1, 1992.
Amended Regulation, Effective July 1, 2000.
Amended Regulation, Effective January 31, 2003.
Amended Regulation, Effective October 1, 2009.
Amended Regulation, Effective August 1, 2012.
Amended Regulation, Effective January 1, 2014.
Regulation 4-7-03 STANDARDS FOR HEALTH MAINTENANCE ORGANIZATIONS Section 1 Authority Section 2 Scope and Purpose Section 3 Applicability Section 4 Definitions Section 5 Accreditation Reviews Section 6 Quality Assurance Section 6 Community Outreach Section 7 Utilization Review Section 8 Credentialing and Organizational Structure Section 9 Cost of Operations Section 10 Examinations Section 11 Severability Section 12 Enforcement Section 13 Effective Date Section 14 History Section 1 Authority This regulation is promulgated and adopted by the Commissioner of Insurance under the authority of §§ 10-1-109, 10-16-402, and 10-16-416, C.R.S.
Section 2 Scope and Purpose The purpose of this regulation is to establish standards to ensure that each health maintenance organization (HMO) licensed in Colorado is delivering quality health care services and each HMO seeking licensure in Colorado has an ongoing quality assurance program and procedures to compile, evaluate and report measures and statistics relating to the costs of its operation, pattern of utilization of services, the availability and accessibility of services, outcomes of care, and such other matters as may be reasonably required by the Commissioner of Insurance.
Section 3 Applicability This regulation shall apply to all HMOs that are licensed or seeking licensure in Colorado. Section 4 Definitions A. “Adverse determination” means, for the purposes of this regulation, a determination by an HMO that an admission, availability of care, continued stay or other health care service has been reviewed and, based upon the information provided, does not meet the HMO's requirement for medical necessity, appropriateness, health care setting, level of care or effectiveness, and the requested service or coverage for the requested service is therefore denied, reduced or terminated.
B. “Commissioner” means, for the purposes of this regulation, the Colorado Commissioner of Insurance.
C. “Facility” means, for the purposes of this regulation, an entity providing health care services or a health care setting, including but not limited to hospitals and other licensed inpatient centers, ambulatory surgical or treatment centers, skilled nursing centers, residential treatment centers, diagnostic, laboratory and imaging centers, and rehabilitation and other therapeutic health settings.
D. “Health care professional” means, for the purposes of this regulation, a physician or other health care practitioner licensed, accredited, or certified to perform specified health services consistent with state and federal statutes.
E. “Health Maintenance Organization” or “HMO” shall have the same meaning as found at § 10-16- 102(36), C.R.S.
F. “Provider” means, for the purposes of this regulation, a health care professional or a facility. Section 5 Accreditation Reviews A. The Commissioner may consider the results of a current accreditation review by a nationally recognized private accrediting entity or of another state entity, with established and maintained standards, as evidence of meeting some or all of the requirements concerning quality assurance, access to care, utilization review, and credentialing.
B. The submission of a current accreditation review does not exempt a HMO from the requirement to submit documentation, as requested by the Commissioner, to demonstrate that the HMO meets or exceeds all state statutory and regulatory requirements.
C. A HMO that has undergone an accreditation review is not exempt from compliance with all financial and market regulation exam requirements found at §§ 10-1-201, et seq., 10-1-301, et seq., and 10-16-416, C.R.S.
Section 6 Quality Assurance A. Each HMO shall establish and maintain an ongoing program for quality assurance accountable to the HMO's governing body. The quality assurance program shall systematically monitor and evaluate the quality and appropriateness of health care services; shall develop and implement methods to resolve identified problems; and shall monitor the implementation of corrective measures to ensure their effectiveness. The evaluation of the quality and appropriateness of health care services shall be prospective, concurrent, and retrospective. The program shall be designed to improve the delivery of health care services and outcomes.
B. The quality assurance program shall implement a written plan that is evaluated at least annually and updated as necessary. The plan shall describe:
1. The program's mission, philosophy, goals and objectives;
2. The program's organizational structure and the job titles of the personnel responsible;
3. Specific diagnoses, conditions or treatments targeted for review by the program and focused studies designed to improve health care services and health outcomes;
4. Mechanisms to evaluate the health of enrollees and the results of treatment and outcomes of health care services in relation to reference data bases, such as current medical research, knowledge, standards and practice guidelines;
5. Mechanisms by which the findings generated by the quality assurance program, including preventive services, shall be used on a continuing basis by providers and other staff to improve the health of enrollees;
6. Mechanisms for the evaluation of the clinical performance of providers; and 7. Confidentiality policies and procedures for enrollee health information considered under the quality assurance program.
C. The quality assurance program shall be directed by a licensed physician or alternatively there shall be substantial input from one or more licensed physicians. The clinical elements of the quality assurance program shall be under the direction of a licensed physician.
D. The quality assurance program shall include preventive services for enrollees that are designed to reduce the rate of occurrence or the likelihood of morbidity, disability or mortality resulting from illness or injury. The program shall strive to meet public and community health goals as well as to improve the health of the plan's enrollees. Programs may include, but are not limited to:
1. Prevention, screening and treatment of environmental diseases;
2. Prevention and treatment of communicable diseases, including vaccine preventable diseases and tuberculosis;
3. Prevention and treatment of tobacco, alcohol or drug addictions;
4. Prevention and treatment of injuries; and 5. Prevention and treatment of chronic diseases and disabilities, and the prevention of complications directly caused thereby.
E. In order for the HMO to conduct effective quality assurance and utilization review programs, each HMO shall develop written medical record policies and procedures and implement a medical records monitoring system that requires the maintenance of medical records by providers that are current, organized, and detailed. Such medical records monitoring system shall facilitate documentation and retrieval of clinical information. The HMO shall institute procedures to safeguard the confidentiality of individual enrollee medical records. Such records shall include, at a minimum, the following information:
1. The enrollee's name, identification number, date of birth, gender and place of residence;
2. Services delivered, including when, where and by whom services were provided; and 3. Medical diagnoses, treatments and therapies prescribed, medications administered or prescribed, referrals and follow-up arrangements.
F. New, amended, and extended contracts between the HMO and providers managed, owned, under contract with or employed by the HMO shall include provisions requiring the sharing between providers, who are treating or who have treated the same enrollee, of medical record information which facilitates the continuity of health care services, consistent with state and federal statutes and regulations.
G. The quality assurance program shall foster the provision of enrollee education relating to the prevention of illness and injury and the management of chronic illnesses and disabilities.
H. Each HMO shall coordinate the quality assurance program with the utilization review and the credentialing functions conducted by the HMO.
I. Each HMO shall make available to the Commissioner, upon request and in the form prescribed, documentation demonstrating the capacity to implement and/or the implementation of the quality assurance program including, but not limited to, the quality assurance plan, policies and procedures, program minutes, annual summary reports of quality assurance activities and evaluations, and focused or special studies.
Section 7 Community Outreach In order to increase access to care to enrollees, HMOs are encouraged to develop community outreach efforts, including but not limited to:
A. Making provisions for delivery of health care services, including community-based services, to persons with disabilities and chronic illnesses, and to high risk or underserved populations;
B. Establishing ongoing collaborative arrangements with public health services, school-based health centers, community clinics, social service agencies, or other health related services or agencies; and C. Developing culturally competent systems of care.
Section 8 Utilization Review A. Each HMO shall implement a written utilization review plan that describes all review activities for covered services provided. The utilization review program, which shall be accountable to the HMO governing body, shall be designed to improve health care outcomes; determine patterns of over- and under-utilization of tests, procedures, and services; monitor issues and data associated with adverse determinations; and implement improvements to health care services and delivery. The program shall include:
1. A medical director who is a licensed physician;
2. Procedures to evaluate concurrently, prospectively, and retrospectively the clinical necessity, appropriateness and efficacy of health services, procedures, or settings;
3. Review of medication usage;
4. Procedures to ensure that any denials of health care services are signed by a licensed physician as required by Colorado law;
5. Mechanisms to ensure consistent and fair application of utilization review criteria, including preauthorization criteria;
6. Data sources and documented clinical review criteria based on sound clinical evidence which are evaluated periodically to assure ongoing efficacy;
7. Mechanisms to assess periodically utilization review activities, report the results to providers and to the HMO's governing body and implement corrective measures as necessary; and 8. Confidentiality policies and procedures for enrollee health information considered under the utilization review program.
B. Each HMO shall make available to the Commissioner, upon request and in the form prescribed, documentation demonstrating the capacity to implement and/or the implementation of the utilization review program including, but not limited to, the utilization review plan, policies and procedures, program minutes, annual summary reports of its utilization review program activities and evaluations in different service areas.
C. Each HMO must comply with the requirements found at §§ 10-16-113 and 10-16-113.5, C.R.S. Section 9 Credentialing and Organizational Structure A. Each HMO shall:
1. Develop and implement a credentialing and recredentialing plan that verifies that all employed and contractual health care professionals who provide health care services to enrollees are licensed, if required, and have all the necessary and appropriate certification and accreditation. If the HMO contracts with health care professionals affiliated with an entity which conducts credentialing for its personnel, verification shall, at minimum, take the form of ascertaining that the entity's credentialing and recredentialing process is in compliance with the requirements of these regulations. The HMO shall reverify the credentials of health care professionals as often as necessary but not less frequently than once every three years. The HMO shall verify the credentials of health care professionals before employing or entering into contracts with such health care professionals;
2. Utilize health care facilities that are licensed, if required, and certified as a provider or supplier for Medicare or Medicaid, if required; and 3. Have, at minimum, a medical director who is a licensed physician designated by the governing body who shall oversee the quality of health care services rendered to enrollees.
B. Each HMO shall make available to the Commissioner upon request and in the form prescribed, documentation demonstrating the capacity to implement and/or the implementation of the credentialing and recredentialing plan, and of methods used to ensure that facilities are licensed or certified, as appropriate. Documentation includes, but is not limited to, policies and procedures and program minutes.
Section 10 Contracting Whenever an HMO elects to perform functions or deliver services indirectly through contracts, agreements or other arrangements, the HMO shall monitor the activities of the entity with which it contracts for compliance with the requirements specified under these regulations and in statute concerning quality assurance, access to care, utilization review, and credentialing. Section 11 Examinations The Commissioner may conduct an examination concerning the quality of health care services of any HMO and its providers with whom such organization has contracts, agreements, or other arrangements pursuant to its health care plan as often as the Commissioner deems it necessary. The Commissioner may accept the results of an accreditation review, as described in Section 5, in order to meet this examination requirement.
Section 12 Severability If any provision of this regulation or the application of it to any person or circumstance is for any reason held to be invalid, the remainder of this regulation shall not be affected. Section 13 Enforcement Noncompliance with this regulation may result in the imposition of any of the sanctions made available in the Colorado statutes pertaining to the business of insurance, or other laws, which include the imposition of civil penalties, issuance of cease and desist orders, and/or suspensions or revocation of license, subject to the requirements of due process.
Section 14 Effective Date This regulation shall become effective on June 1, 2018. Section 15 History New regulation effective June 1, 2018.
_________________________________________________________________________ Editor’s Notes 3 CCR 702-4 has been divided into smaller sections for ease of use. Versions prior to 09/01/2011 and rule history are located in the first section, 3 CCR 702-4. Prior versions can be accessed from the History link that appears above the text in 3 CCR 702-4. To view versions effective after 09/01/2011, select the desired part of the rule, for example 3 CCR 702-4 Series 4-1, or 3 CCR 702-4 Series 4-6. History [For history of this section, see Editor’s Notes in the first section, 3 CCR 702-4]