Ala. Admin. Code r. 482-1-083-.03

Current through Register Vol. 43, No. 1, October 31, 2024

Section 482-1-083-.03 - Powers And Duties Of The Association

The Association, acting by and through its Board of Directors, shall have the following powers and duties.

(a) Insolvency: If a member HMO becomes an insolvent HMO, as that term is herein defined, the Association shall, subject to any reasonable conditions imposed by the Association and approved by the Commissioner, either:

1.

(i) guarantee, assume, or reinsure, or cause to be guaranteed, assumed or reinsured, any or all of the evidences of coverage of such insolvent HMO; or

(ii) assure payment of the contractual obligations of the insolvent HMO; and

(iii) provide such moneys, pledges, notes, guarantees, or other means as are reasonably necessary to discharge such duties; or

2. Provide benefits as follows:

(i) assure payment of covered health care services (except for terms of conversion and renewability) that would have been payable under the evidences of coverage of the insolvent HMO, for contractual obligations incurred

(I) with respect to group contracts, not later than the earlier of the next renewal date under such contracts or 45 days, but in no event less than 30 days for which premium has been paid, from the date on which the member HMO is declared insolvent and ordered liquidated;

(II) with respect to individual contracts, not later than the earlier of the next renewal date or 90 days, but in no event less that 30 days for which premiums have been paid, from the date on which the member HMO is declared insolvent and ordered liquidated;

(III) with respect to an enrollee who is confined in an acute care hospital or skilled nursing facility, in the event there is no other coverage or reinsurance available, the Association will continue to provide the covered health care services until the enrollee is discharged from such facility to extent that this was a contractual obligation of the HMO before insolvency.

(ii) make diligent efforts to insure that the liquidator/receiver provides all known enrollees 30 days notice of the termination of benefits provided; and

(iii) make available to each known enrollee substitute coverage either through a member HMO or through reinsurance or conventional insurance, without requiring evidence of insurability, and without any waiting period or exclusion that would not have applied under the cancelled evidence of coverage. If such substitute coverage is made available through a member HMO, it must comply with the State Public Health Department Rules and Regulations concerning health care services. If the enrollee declines the substitute coverage, then the Association's obligation to that enrollee ceases as to any obligation incurred after the refusal of said substitute coverage or the deadline set for accepting such coverage.

(b) Impairment: If a member HMO becomes an impaired HMO, as that term is herein defined, the Association's powers, duties and/or responsibilities may include, but are limited to, the following:

to function as an advisory board to the Commissioner and/or the supervising court with regard to the rehabilitation of the impaired HMO; and/or

to assist the Commissioner and/or supervising court in reviewing, revising and negotiating with providers of health care services for enrollees of the impaired HMO; and/or

to function as a review board at the request of the Commissioner and/or supervising court in determining the appropriateness and/or effectiveness of loans, notes, guarantees, pledges or any other means entered to assure payment of the contractual obligations of the impaired HMO with regard to such HMOs rehabilitations; and/or

(iv) to assist the Commissioner and/or supervising court in determining whether to seek a buyer for the impaired HMO, and further assist in soliciting potential buyers;

(c) The Association's obligations with respect to coverage under any evidence of coverage of the impaired or insolvent HMO shall cease on the date such evidence of coverage is replaced by any similar coverage secured by the enrollee, the contract holder, the Association or the Receiver or Liquidator. If the enrollee declines the substitute coverage, then the Association's obligation to that enrollee ceases as to any obligation incurred after the refusal of said substitute coverage or the deadline set for accepting said coverage.

(d) The obligation of the Association for any covered health care services does not include payment to any affiliated health care provider for services covered by a hold-harmless agreement and does not preempt coverage provided through insolvency insurance provided as part of or an endorsement to a reinsurance agreement or otherwise. In the event a provider of insolvency reinsurance attempts to avoid its obligation to pay claims, the Liquidator will notify the Association within ninety (90) days of the insolvency or earlier, if at all possible. The Association will work with the Liquidator to insure payment of uncovered expenses on behalf of the enrollee, and if alternative means of payment have not been made within one hundred-twenty (120) days of the insolvency, the Association will proceed to process and pay claims for covered health care services. If such payments are made, the Association will have the right to reimbursement on any proceeds ultimately recovered from the reinsurer under the insolvency insurance coverage.

(e) The Association may render assistance and advice to the Commissioner, upon his request, concerning rehabilitation, payment of claims, continuance of coverage, or the performance of other contractual obligations of any impaired or insolvent HMO.

(f) The Association shall have standing to appear before any court with jurisdiction over an impaired or insolvent HMO concerning which the Association is or may become obligated under the Act. Such standing shall extend to all matters germane to the powers and duties of the Association, including, but not limited to, submitting proposals for reinsuring or guaranteeing the covered contractual obligations of the impaired or insolvent HMO and the determination of the covered contractual obligations.

(g) The contractual obligations of the insolvent HMO for which the Association becomes or may become liable shall be no greater than the contractual obligations of the insolvent HMO would have been in the absence of an insolvency. The aggregate liability of the Association shall not exceed $300,000 under one or more covered evidence(s) of coverage with respect to any enrollee.

(h) In addition to the powers and duties enumerated elsewhere, the Board of Directors of the Association shall have the following powers and duties:

(I) The Board may:

I. Enter into such contracts as are necessary or proper to carry out the provisions and purposes of the Act and this chapter.

II. Sue or be sued, including taking any legal actions necessary or proper for recovery of any unpaid assessments:

III. Borrow money to effect the purposes of the Act and this Plan.

IV. Employ or retain such persons as are necessary to handle the financial transactions of the Association, and to perform such other functions as become necessary or proper under the Act or this chapter.

V. Negotiate and contract with any liquidator, rehabilitator, conservator, or ancillary receiver to carry out the powers and duties of the Association;

VI. Take any legal action as may be necessary to avoid payment of improper claims or contractual obligations;

VII. Exercise, for the purpose of the Act and this chapter, and to the extent approved by the Commissioner, the powers of a health maintenance organization, but in no case may the Association issue evidence(s) of coverage other than those issued to perform the contractual obligations of the impaired or insolvent HMO.

(II) It shall be the duty of the Board of Directors, upon two-thirds vote of the full Board, to notify the Commissioner of any information indicating any member HMO may be an impaired or insolvent HMO.

(III) The Board of Directors may, upon two-thirds vote of the full Board, request that the Commissioner order an examination of any member HMO which the Board in good faith believes may be an impaired or insolvent HMO. The Commissioner shall begin such examination as soon as practicable. The examination may be conducted as a National Association of Insurance Commissioner's examination or may be conducted by such person as the Commissioner designates. The Commissioner shall notify the Board of Directors when the examination is completed. The request for an examination shall be kept on file by the Commissioner but the report shall not be available to the Board prior to the release of the examination report to the public. The Association shall pay the reasonable cost for any examination made at the request of its Board of Directors.

(IV) The Board of Directors may, upon majority vote, make recommendations to the Commissioner for the detection and prevention of HMO insolvencies.

(V) The Board of Directors may, at the conclusion of any HMO insolvency in which the Association was obligated to pay covered claims, prepare a report to the Commissioner containing such information as it may have in its possession bearing on the history and causes of such insolvency. The Board may cooperate with the boards of directors of guaranty associations in other states in preparing a report on the history and causes for insolvency of a particular HMO, and may adopt by reference any report prepared by such other associations.

Author: Commissioner of Insurance

Ala. Admin. Code r. 482-1-083-.03

New Rule: Filed October 3, 1988; effective October 20, 1988. 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.

Statutory Authority:Code of Ala. 1975, §§ 27-2-17, 27-21A-19, 27-21A-12(i).