31 Pa. Code § 301.202 - Financial requirements-point-of-service products
(a)
Minimum net worth
compliance.
(1) HMOs offering
point-of-service products will be assuming additional indemnity-type financial
risk. To adequately protect HMO members enrolled in point-of-service products
and to ensure HMO ability to pay indemnity claims for covered services rendered
by out-of-network providers, each HMO desiring to offer a point-of-service
product shall first present satisfactory evidence of having a minimum net worth
of the highest of $1.5 million of 2% of premiums, or an amount equal to the sum
of 3 months uncovered health care expenditures as reported on the most recent
financial statement filed with the Insurance Department. The evidence shall be
presented to the Insurance Department's Bureau of Licensing and Financial
Analysis, Office of the Regulation of Companies.
(2) Upon satisfactory compliance with this
requirement, an HMO may then make an appropriate program filing with the
Department's Office of Rate and Policy Regulation, Division of HMOs/PPOs and to
the Bureau of Health Financing and Program Development of the Health
Department.
(b)
Adequate reserving requirements.
(1) An important component of financial
integrity of a point-of-service product is the ability of an HMO to monitor
adequately incurred but not reported claims (IBNR) and adequately reserve for
the liabilities.
(2) An HMO
receiving approval to offer a point-of-service product shall establish and
maintain specified reserves for uncovered expenditures-that is, expenditures
owed to nonparticipating providers not having contracts with the HMO which
includes NAIC/NAHMOR financial hold harmless language-greater than the most
recent 3 months of out-of-network (swing out) claims paid.
(3) Each HMO gaining approval to offer a
point-of-service product shall submit to the Department's Bureau of Licensing
and Financial Analysis on a quarterly basis evidence that it has met this
requirement and established sufficient reserves.
(4) The Department and the Department of
Health (the Departments) may suspend the HMO's authority to enroll additional
members in point-of-service products if it fails to maintain the minimum net
worth requirements as set forth in subsections (a) and this subsection. Failure
of the HMO to correct a reserve deficiency promptly may result in withdrawal of
its authority to offer a point-of-service product.
(c)
Limits on out-of-network
usage/expenses.
(1) It is the
Department's interpretation of the act that, while HMOs may be permitted to
offer point-of-service products, the primary business of an HMO should remain
the provision and financing of basic health services through the HMO's
organized health services delivery system centered around each member's
voluntarily selected primary care physician (PCP).
(2) Therefore, the Departments are
establishing a 10% target limit for out-of-plan usage.
(3) The 10% target limit shall be calculated
as follows for each reporting period:
Total point-of-service out of network claims incurred by the HMO for the reporting period. Divided by:
Total of all claims incurred by the HMO for the reporting period. Equals:
The target percentage
(i) The target percentage shall be calculated
and reported to the Departments on a quarterly basis.
(ii) If the target percentage exceeds 10%.
The HMO shall include with its submission of the target percentage calculation:
(A) An explanation of why and how out-of-plan
utilization has exceeded 10%.
(B)
What steps will be taken during the following reporting period to bring
out-of-plan utilization to within the target percentage.
(iii) The Departments may suspend the HMO
from enrolling additional members in the point-of-service product if the target
percentage exceeds 10% for more than 3 consecutive quarters.
(iv) The Departments will compare reported
estimated expenditures with actual expenditures. Variations between estimated
and actual expenditures may result in suspension of the HMO's authority to
offer a point-of-service product.
Notes
This section cited in 31 Pa. Code § 301.203 (relating to filing requirements).
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