§27-41-4  Issuance Of License. –

Published: 2015

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Health Maintenance Organizations

SECTION 27-41-4

   § 27-41-4  Issuance of license. –

(a)(1) Upon receipt of an application for issuance of a license, the director

shall transmit copies of the application and accompanying documents to the

director of health;

   (2) The director of health shall determine whether the

applicant for a license, with respect to health care services to be furnished:

   (i) Has demonstrated that it fulfills the definition of a

health maintenance organization delineated in § 27-41-2(h);

   (ii) Has demonstrated the willingness and potential ability

to assure that health care services will be provided in a manner to assure both

availability and accessibility of adequate personnel and facilities and in a

manner enhancing availability, accessibility, and continuity of service;

   (iii) Has arrangements, satisfactory to the director of

health, for an ongoing quality of health assurance program concerning health

care processes and outcomes; and

   (iv) Has a procedure, satisfactory to the director of health,

to develop, compile, evaluate, and report statistics relating to the cost of

its operations, the pattern of utilization of its services, the availability

and accessibility of its services, and any other matters that may be reasonably

required by the director of health;

   (3) Within a reasonable time following receipt of the

application for issuance of a license, the director of health shall certify to

the director that the proposed health maintenance organization meets the

requirements of subdivision (2) of this section or notify the director that the

health maintenance organization does not meet those requirements and specify in

what respects it is deficient.

   (b) The director shall issue or deny a license to any person

filing an application pursuant to § 27-41-3 within a reasonable time of

receipt of the certification from the director of health. No license shall be

issued until the certification is received from the director of health.

Issuance of a license shall be granted if the director is satisfied that the

following conditions are met:

   (1) The persons responsible for the conduct of the affairs of

the applicant are competent, trustworthy, and possess good reputations;

   (2) The director of health certifies, in accordance with

subsection (a) of this section, that the health maintenance organization's

proposed plan of operation meets the requirements of subdivision (a)(2) of this


   (3) The health maintenance organization will effectively

provide or arrange for the provision of basic health care services on a prepaid

basis, through insurance or otherwise, except to the extent of reasonable

requirements for copayments;

   (4) The health maintenance organization is financially

responsible and may reasonably be expected to meet its obligations to enrollees

and prospective enrollees. The director shall require health maintenance

organizations licensed pursuant to this chapter to maintain protection against

insolvency. In making these determinations, the director may consider:

   (i) The financial soundness of the health maintenance

organization's arrangements for health care services and the schedule of

charges used in connection with them;

   (ii) The adequacy of working capital;

   (iii) Any agreement with an insurance company for insuring

the payment of the cost of health care services or the provision for automatic

applicability of an alternative coverage in the event of discontinuance of the

health maintenance organization;

   (iv) Any agreement with providers for the provision of health

care services; and

   (v) Any deposit of securities submitted in accordance with

§ 27-41-13 as a guarantee that the obligations will be duly performed;

   (5) The enrollees will be afforded an opportunity to

participate in matters of policy and operation pursuant to § 27-41-6;

   (6) Nothing in the proposed method of operation, as shown by

the information submitted pursuant to § 27-41-3 or by independent

investigation, is contrary to the public interest; and

   (7) Certification by the director of health that any

deficiencies cited by the director of health have been or will be corrected.

   (c) A license shall be denied only after compliance with the

requirements of § 27-41-20.

History of Section.

(P.L. 1983, ch. 225, § 2; P.L. 1984, ch. 91, § 1.)

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