NAC695C.135. Contract of insurance for health maintenance organization: Amount required; provision concerning insolvency of organization; notice of cancellation.

     1. Each health maintenance organization shall obtain a contract of insurance for the cost of providing basic health care services which exceed in the aggregate:

     (a) For a health maintenance organization in operation for 2 years or less, $30,000 per enrollee per year;

     (b) For a health maintenance organization in operation for more than 2 years which has a free surplus of $2,000,000 or less, $50,000 per enrollee per year;

     (c) For a health maintenance organization in operation for more than 2 years which has a free surplus of more than $2,000,000, $100,000 per enrollee per year;

     (d) For a health maintenance organization in operation for more than 3 years which has a free surplus of more than $4,000,000, $150,000 per enrollee per year; and

     (e) For a health maintenance organization in operation for more than 5 years which has a free surplus of more than $8,000,000, $200,000 per enrollee per year.

     2. The contract of insurance must include a provision that, in the case of the insolvency of the health maintenance organization, the insurer will pay all claims made by an enrollee for the period for which a premium has been paid to the health maintenance organization. The contract may have an aggregate limit of $5,000,000 but must specifically provide for the:

     (a) Continuation of benefits to enrollees for the period for which the subscribers have made prepayments to the health maintenance organization;

     (b) Continuation of benefits for those enrollees confined in a medical facility or facility for the dependent at the time of the insolvency of the health maintenance organization until the enrollee is discharged from the facility; and

     (c) Payment of a provider not affiliated with the health maintenance organization who provided medically necessary services, as described in the evidence of coverage, to an enrollee.

     3. Any contract of insurance obtained by a health maintenance organization under this section may be cancelled only after 90 days’ written notice of the cancellation is given to the Division by the health maintenance organization and its insurer.

     4. As used in this section:

     (a) “Basic health care services” includes hospitalization but excludes any benefits under an optional plan for dental, vision or pharmaceutical benefits.

     (b) “Free surplus” means the total capital and surplus, as reported on the National Association of Insurance Commissioners’ form of annual statement.

     (Added to NAC by Comm’r of Insurance, eff. 6-11-86; A 5-27-92; R129-96, 10-29-97; R148-99, 1-27-2000; R248-03, 11-12-2004)