Ala. Admin. Code r. 482-1-079-.02 - Definitions

(1) All terms defined in the Health Maintenance Organization Act which are used in these rules shall have the same meaning as in the Act.

(2) HMO. Health maintenance organizations shall be abbreviated as HMO in these rules.

(3) Governing Authority. The entity, whether natural, corporate or otherwise, in which the ultimate responsibility and authority for the conduct of the HMO is vested.

(4) Assets and Liabilities. Assets include but are not limited to cash, bank deposits, securities, accounts receivable, and real estate. Liabilities include notes, mortgages, accounts payable, reserve for taxes, commissions and other charges, borrowed money, debt instruments, reserve for claims, salaries and expenses, and all debts and contingent obligations of any nature whatsoever.

(5) Actuarially Sound. The ability of the proposed HMO to deliver all the services to be furnished by the HMO at the rate structure established. This will be determined by the Commissioner based on the HMO's profitability or actuarial study under which the rates are established. Consideration will be given to the character and amount of guaranteed service by the organizers, the method of marketing, and the degree of market penetration that can reasonably be expected.

(6) Excessive, Inadequate or Unfairly Discriminatory. A rate shall be deemed to be excessive if such rate is unreasonably high for the services provided when compared with the cost for similar health care services in the community. A rate shall be deemed to be inadequate if the rate is unreasonably low for the services provided, if the continued use of the rate endangers the solvency of the HMO using it, or if continued use by the HMO has or will have the effect of creating unfair competition and a monopoly. However, no rate will be deemed inadequate or excessive if the HMO can show that the rate accurately reflects the real cost of providing the health care services. This provision is designed to promote efficient and effective operation of HMOs. A rate shall be deemed to be unfairly discriminatory if it is a higher or lower rate than that charged to any other person of the same class or group based upon age, sex or physical condition.

(7) Premium. The fixed sum paid by or on behalf of an enrollee or group of enrollees on a prepaid per capital or prepaid aggregate basis for the services rendered by the HMO.

(8) Management contractor. Any person other than the management staff entering into an agreement with the governing authority of a HMO for the purpose of managing day-to-day operations of the HMO.

(9) Commissioner. Where used in this chapter shall mean the Commissioner of Insurance.

Author: Commissioner of Insurance

Notes

Ala. Admin. Code r. 482-1-079-.02

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.

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