(a) Pursuant to section 2807-c(2-a) of the Public Health Law, health maintenance organizations certified under article 44 of the Public Health Law or article 43 of the Insurance Law shall pay a nine percent differential on their rates of payment for general hospital inpatient services (hereinafter referred to as the HMO factor) into a statewide health maintenance organization pool, unless the HMO factor is eliminated or reduced in accordance with Public Health Law, section 2807-c(2-a). Payment of the HMO factor shall not be required for subscribers who are eligible for medical assistance pursuant to the Social Services Law, and/or participants in regional pilot projects established pursuant to chapter 703 of the Laws of 1988.

1. (1) Commencing on August 15, 1992 and on a monthly basis thereafter, each health maintenance organization shall pay the HMO factor, established or adjusted in accordance with section 2807-c(2-a) of the Public Health Law, into a statewide health maintenance organization pool for each patient discharged on or after July 1, 1992. Funds accumulated in the statewide health maintenance organization pool, including income from invested funds, shall be transferred and credited to the general fund.
2. (2) Payments to the statewide health maintenance organization pool and reports required pursuant to paragraph (5) of this subdivision shall be due on or before the 15th day following the end of each month. Health maintenance organizations shall submit estimated amounts due for patients discharged in a calendar month in accordance with this section unless payment of actual amounts due for such calendar month has been made within such 15-day time period. If a health maintenance organization fails to submit actual or estimated payment in accordance with this subdivision, the health maintenance organization shall be subject to interest and penalties in accordance with section 2807-c(2-a)(c)(ii) of the Public Health Law.
3. (3) Estimated amounts due for patients discharged in each calendar month shall be determined by multiplying the applicable HMO factor established by section 2807-c(2-a) of the Public Health Law by the sum of actual claims paid, and claims reported to the HMO but not paid, and estimated incurred but not reported claims. The monthly payment shall also include a prior period adjustment that reconciles actual inpatient claims experience compared to prior estimates of amounts due, consistent with methodologies used in preparation of the HMO's certified financial statements.
4. (4) Each HMO required to make payments shall make a final reconciliation and adjustment for each differential payment period. For the year 1992, the differential payment period shall be for the period July 1st through December 31st. For years subsequent to 1992, the differential payment period shall be a calendar year period, except that the differential payment period shall be the six-month period ending June 30th if the HMO has qualified for a complete elimination of the differential effective July 1st of that year. The final reconciliation for any differential payment period shall be based on the audited inpatient claims experience of the HMO and certified by a certified public accountant. The final reconciliation shall be completed no earlier than three months following the end of the period, and shall be due four months after the end of the period.
5. (5) HMOs shall file reports in such form and manner as designated by the Department of Health. Such reports shall indicate the amounts paid based on the discharges in each calendar month and shall separately indicate actual claims paid, claims reported but not paid and claims incurred but not reported, as well as indicate the adjustments made due to reconciliation of prior period estimated claims experience. If an HMO fails to submit the differential payment, the Department of Health for purposes of determining interest and penalties in accordance with section 2807-c(2-a)(c)(ii) of the Public Health Law shall estimate the amounts due pursuant to this section based on the average inpatient monthly claims expense contained in the most recent HMO financial reports submitted to the New York State Insurance Department or the Department of Health.

(b)