The Vermont Statutes Online
§ 5101. Definitions
As used in this chapter:
(1) "Commissioner" means the Commissioner of Financial Regulation.
(2) "Health maintenance organization" means any person who furnishes, either directly or through arrangements with others, comprehensive health care services to an enrolled member in return for periodic payments; the amounts of said payments are agreed upon prior to the time during which the health care services may be furnished; and who is obligated to the member to arrange for or to provide directly available and accessible health care services.
(3) "Person" includes individuals, partnerships, associations, trusts, and corporations.
(4) "Health care services" means physician, hospitalization, laboratory, x-ray service, and medical equipment and supplies, which may include: medical, surgical, and dental care; psychological, obstetrical, osteopathic, optometric, optic, podiatric, chiropractic, nursing, physical therapy services, and pharmaceutical services; health education; preventive medical, rehabilitative, and home health services; inpatient and outpatient hospital services, extended care, nursing home care, convalescent institutional care, laboratory and ambulance services, appliances, drugs, medicines, and supplies; and any other care, service, or treatment of disease or conditions, or the maintenance of the physical and mental well-being of members.
(5) "Member" means any individual who has entered into a contract with a health maintenance organization for health care services or for services related to but not limited to processing, administering, or the payment of claims for health care services or in whose behalf such an arrangement has been made.
(6) "Evidence of coverage" means any certificate, agreement, or contract issued to a member setting out the coverage to which he or she is entitled and the rates therefor.
(7) "Provider" means any physician, hospital, or other institution, organization, or other person who furnishes health care services.
(8) "Grievance" means a written complaint submitted to the Department or to the health maintenance organization in accordance with the health maintenance organization's formal grievance procedure by or on behalf of a member regarding any aspect of the health maintenance organization relative to the member.
(9) "Uncovered expenditures" mean the costs to the health maintenance organization for health care services that are the obligation of the health maintenance organization, for which a member may also be liable in the event of the health maintenance organization's impairment or insolvency, and for which no alternative arrangements for payment have been made that are acceptable to the Commissioner. (Added 1979, No. 117 (Adj. Sess.); amended 1989, No. 225 (Adj. Sess.), § 25; 1993, No. 30, §§ 1, 2, eff. May 21, 1993; 1995, No. 180 (Adj. Sess.), § 38 2011, No. 78 (Adj. Sess.), § 2, eff. April 2, 2012; 2013, No. 96 (Adj. Sess.), § 21.)
§ 5102. Application; certification, filing, and license fees
(a) No person may operate a health maintenance organization without obtaining a certificate of authority from the Commissioner.
(b) Application for a certificate of authority shall be made to the Commissioner and include such information and in such form as the Commissioner prescribes, including the following:
(1) A copy of the basic organizational document, if any, of the applicant or other applicable documents, and all amendments thereto.
(2) A copy of the bylaws, rules, and regulations, or similar document, if any, regulating the conduct of the internal affairs of the applicant.
(3) A list of the names, addresses, and official positions of the persons who are to be responsible for the conduct of the affairs of the applicant, including all members of the board of directors, board of trustees, executive committee, or other governing board or committee, the principal officers in the case of a corporation, and the partners or members in the case of a partnership or association; a statement as to the character and competence of these persons and such disclosure and conflict of interest statements as required.
(4) A copy of the proposed evidence of coverage to be issued to the members; and proposed premium rates therein.
(5) A copy of the proposed form of the group contract, if any, which is to be issued to employers, unions, associations, trusts, or other organizations.
(6) Financial statements showing the applicant's assets, liabilities, and sources of financial support. If the applicant's financial affairs are audited by independent certified public accountants, a copy of the applicant's most recent regular certified financial statement shall be deemed to satisfy this requirement unless the Commissioner directs that additional or more recent financial information is required.
(7) A description of the proposed method of marketing the plan, a financial plan which includes a three-year projection of the initial operating results anticipated, and a statement as to the sources of working capital as well as any other sources of funding. The Commissioner shall adopt such rules relating to financial reserves of the health maintenance organization as he or she deems necessary. These rules shall require financial reserves to be computed in relation to the health maintenance organization's financial risks and the impact of those risks on the health maintenance organization's ability to fulfill its contractual and financial obligations to its members.
(9) A statement generally describing the organizational structure of the applicant, its operation, the location of facilities where health care shall be available to members, the types of health care personnel to be used at each location and the approximate number of each personnel type available at each location, the name and location of primary and tertiary care facilities to be used and a projection of utilization for each facility, the method used to monitor the quality of health care services furnished, and the method of resolving grievances initiated by members or providers.
(c) Every health maintenance organization subject to this chapter shall pay to the Commissioner for filing an application for a certificate of authority or amendment thereto $200.00, and for filing each annual report $100.00. In addition, each organization shall pay a license fee for the year of registration and a renewal fee for each year thereafter of $300.00.
(d) The Commissioner shall approve or deny such application within 60 days, based on the Commissioner's determination that the application promotes the general good of the State, and of the reliability and financial condition of the applicant.
(e)(1) Continuance by the Commissioner of a certificate of authority issued under this section shall be contingent upon satisfactory performance by the organization as to the delivery, continuity, accessibility, and quality of the services to which enrolled members are entitled, compliance with the provisions of Vermont law and rules adopted thereunder, and the continuing fiscal soundness of the organization.
(2) Each health maintenance organization shall keep current the information required to be disclosed in subsection (b) of this section by reporting all changes or additions in writing to the Commissioner. Changes or additions to the information and documents required by subdivision (b)(1) of this section shall be filed 30 days before the change or addition becomes effective. The Commissioner shall approve such change or addition unless it would interfere with the financial stability of the company, is not in the best interests of members, or the public, or would cause the company to violate any law or rule. If the Commissioner fails to disapprove the change or addition, it shall be deemed approved at the expiration of the 30 days. All other changes or additions shall be filed within 15 days after the end of the month in which each change or addition becomes effective.
(3) On or before April 1 of each year, the health maintenance organization shall file with the Commissioner:
(A) a report on the operations of the quality assurance program and the grievance procedures describing any changes made in the operations of the quality assurance program and the grievance procedures during the preceding calendar year;
(B) the net worth, deposit, and designated reserve calculations made under subsections 5102b(b) and (c) of this title;
(C) a report on the health maintenance organization's operations in this State in a form prescribed by the Commissioner; and
(D) any other information reasonably required by the Commissioner to evaluate the organization's satisfactory performance under the certificate of authority.
(4) In addition to the remedies under section 5109 of this title, if, after notice and hearing, the Commissioner finds that the organization is performing unsatisfactorily, is impaired or insolvent, or has not complied with its plan of operation or any provision of Vermont law, the Commissioner may revoke, suspend, or impose conditions on the organization's certificate of authority.
(f) Upon request by a Program for All-Inclusive Care for the Elderly (PACE) authorized under federal Medicare law, or by a Prepaid Inpatient Health Plan (PIHP) or Prepaid Ambulatory Health Plan (PAHP) established in accordance with federal Medicare or Medicaid laws and regulations, the Commissioner may approve the exemption of the PACE program, PIHP, or PAHP from the provisions of this chapter and from any other provisions of this title if the Commissioner determines that the purposes of this chapter and the purposes of any other provision of this title will not be materially and adversely affected by the exemption. In approving an exemption, the Commissioner may prescribe such terms and conditions as the Commissioner deems necessary to carry out the purposes of this chapter and this title. (Added 1979, No. 117 (Adj. Sess.); amended 1991, No. 166 (Adj. Sess.), § 14; 1993, No. 30, §§ 3-5, eff. May 21, 1993; 1993, No. 235 (Adj. Sess.), § 10a; 1995, No. 180 (Adj. Sess.), § 5; 2005, No. 88 (Adj. Sess.), § 2, eff. Feb. 15, 2006; 2005, No. 122 (Adj. Sess.), § 7; 2007, No. 178 (Adj. Sess.), § 7; 2015, No. 23, § 85.)
§ 5102a. Grievance procedures
A health maintenance organization shall establish and maintain a grievance or complaint handling procedure which has been approved by the Commissioner to provide for the resolution of grievances and complaints initiated by members. The organization shall respond in writing to any grievance or complaint within 15 days, advising the complainant of the resolution of the grievance or complaint or that a resolution is in process and that a response will be furnished in a timely manner. The health maintenance organization shall maintain records on all grievances received under this section until the Department has filed a report of examination on the grievances but no longer than seven years from the date of the grievance. Members shall be provided with a copy of the grievance procedures upon enrollment. (Added 1993, No. 30, § 6, eff. May 21, 1993.)
§ 5102b. Solvency protections
(a) Before issuing any certificate of authority, the Commissioner shall require that the health maintenance organization have an initial net worth of $1,500,000.00 and shall thereafter maintain the minimum net worth required under subsection (b) of this section.
(b) Every health maintenance organization must maintain a minimum net worth equal to the greater of:
(2) Two percent of annual premium revenues as reported on the most recent annual financial statement filed with the Commissioner on the first $150,000,000.00 of premium plus one percent of annual premium on the premium in excess of $150,000,000.00;
(3) An amount equal to the sum of three months uncovered expenditures as reported on the most recent financial statement filed with the Commissioner; or
(4) An amount equal to the sum of ten percent of annual health care expenditures related to its Vermont business except those paid on a capitated basis or managed hospital payment basis as reported on the most recent financial statement filed with the Commissioner plus four percent of annual hospital expenditures related to its Vermont business paid on a managed hospital payment basis as reported on the most recent financial statement filed with the Commissioner.
(c)(1) Unless otherwise provided in subdivisions (2) through (6) of this subsection, each health maintenance organization shall deposit with the State Treasurer for the benefit of all members of the health maintenance organization cash, securities listed by the Securities Valuation Office of the National Association of Insurance Commissioners or clean, irrevocable, unconditional letters of credit, issued or confirmed by a qualified United States institution, approved by the Commissioner, or other security or collateral acceptable to the Commissioner which at all times shall have a value of not less than the greater of $300,000.00 or 50 percent of the amount provided for in subdivision (b)(4) of this section or such other amount as the Commissioner may require. The health maintenance organization shall, on or before April 1 of each calendar year, calculate the amount of the deposit required under this section and shall deposit with the State Treasurer any additional amount required to meet the minimum required under this subsection.
(2) A health maintenance organization that is in operation on May 21, 1993 shall make a deposit equal to one-half of the amount required by the Commissioner under this subsection within 30 days of the effective date of this section. On or before the first day of the next full calendar year, the health maintenance organization shall make a deposit equal to one-half the amount required by the Commissioner under this subsection.
(3) The deposit shall be an admitted asset of the health maintenance organization in the determination of net worth.
(4) All income from deposits shall be an asset of the organization. A health maintenance organization that has made a securities deposit may withdraw that deposit or any part thereof after making a substitute deposit of cash, securities listed by the Securities Valuation Office of the National Association of Insurance Commissioners, or any combination of these or other security of equal amount and value. Any securities deposited under this section shall be approved by the Commissioner before being deposited or substituted.
(5) The Commissioner may order the deposits of designated reserves to be used for the protection of the health maintenance organization's members and the continuation of health care services to members of a health maintenance organization in the event the Commissioner takes any actions under chapter 145 of this title. The Commissioner may use the deposit for administrative costs directly attributable to the proceeding. If the health maintenance organization is placed in receivership or liquidation, the deposit shall be an asset subject to the provisions of chapter 145 of this title.
(6) In lieu of any other requirement of this subsection, the Commissioner may accept the segregation for use in this State of designated reserves established by the health maintenance organization under the laws of another jurisdiction provided that such reserves are found to be adequate by the Commissioner to meet the purpose of this section and the domiciliary jurisdiction approves the commitment of such reserves for use by the Commissioner.
(7) In lieu of any other requirement of this subsection, the Commissioner may accept any instrument, surety, or other insurance policy found to be adequate to meet the purposes of this section.
(d) Every contract between a health maintenance organization and a participating provider of health care services shall be in writing and shall require that in the event the health maintenance organization fails to pay for health care services as set forth in the contract, the member shall not be liable to the provider for any sums owed by the health maintenance organization.
(e) If the Commissioner determines that the premiums received by a health maintenance organization for its Vermont members exceed $2,000,000.00 for any calendar year or that the health maintenance organization was incorporated in a state without solvency protections that are substantially equivalent to those offered under this chapter, the Commissioner may order that Vermont contracts be conducted through an affiliate or subsidiary corporation incorporated under Vermont law.
(f) The Commissioner shall require that each health maintenance organization have a plan for handling its impairment or insolvency which allows for continuation of benefits for the duration of the contract period for which premiums have been paid and continuation of benefits to members who are confined on the date of impairment or insolvency in an inpatient facility until their discharge or expiration of benefits. In considering such a plan, the Commissioner may require:
(1) the health maintenance organization to procure insurance to cover the expenses to be paid for continued benefits after an insolvency;
(2) provisions in provider contracts that obligate the provider to provide services for the duration of the period after the health maintenance organization's insolvency for which premium payment has been made or until the member has been discharged from inpatient facilities, whichever comes first;
(3) insolvency reserves;
(4) acceptable letters of credit; and
(5) any other arrangements to assure that benefits are continued in accordance with this subsection.
(g) If at any time uncovered expenditures exceed ten percent of total health care expenditures, the Commissioner may grant emergency rate increases and require a health maintenance organization to build an uncovered expenditures insolvency deposit with the State Treasurer in an amount not to exceed 120 percent of the health maintenance organization's outstanding liability for uncovered expenditures for members in this State, including incurred but not reported claims. The deposit under this section shall be calculated as of the first day of the month and maintained for the remainder of the month. The amounts deposited under this subsection shall be in addition to the deposit required under subsection (c) of this section.
(h) The deposit required under subsection (g) of this section may be used only as provided under this subsection. The Commissioner may order the deposit to be used for administrative costs associated with administering the deposit and for the payment of claims for uncovered expenditures of members of the Vermont portion of its business. Claims for uncovered expenditures shall be paid from the deposit and other available assets on a pro rata basis. The Commissioner may order partial distributions pending final distribution. Any amount of the deposit remaining after final distribution under this section shall be paid over to the liquidator or rehabilitator of the health maintenance organization and may be distributed in accordance with chapter 145 of this title.
(i)(1) In the event a health maintenance organization is declared insolvent under chapter 145 of this title, the Commissioner may order all other entities licensed or authorized under this title that participated in the enrollment process with the insolvent health maintenance organization at a group's last regular enrollment period to offer such group's members a 30-day enrollment period commencing upon the date the insolvency is declared by a court of competent jurisdiction. Each such entity shall notify and offer such members of the insolvent health maintenance organization the same coverages and rates that it had offered to the members of the group at its last regular enrollment period.
(2) If no other such entity had been offered to some groups enrolled in the insolvent health maintenance organization, or if the Commissioner determines that all other health maintenance organizations lack sufficient health care delivery resources to assure that health care services will be available and accessible to all of the group members of the insolvent health maintenance organization, the Commissioner may allocate equitably the insolvent health maintenance organization's group contracts for such groups among all health maintenance organizations which operate within a portion of the insolvent health maintenance organization's service area, taking into consideration the health care delivery resources of each health maintenance organization. Each health maintenance organization to which a group or groups are so allocated shall notify and offer such group or groups the health maintenance organization's existing coverage which is most similar to each group's coverage with the insolvent health maintenance organization at rates determined in accordance with the successor health maintenance organization's existing rating methodology.
(3) The Commissioner may also allocate equitably the insolvent health maintenance organization's nongroup members who are unable to obtain other coverage among all health maintenance organizations which operate within a portion of the insolvent health maintenance organization's service area, taking into consideration the health care delivery resources of each such health maintenance organization. Each health maintenance organization to which nongroup members are allocated shall notify and offer such nongroup members the health maintenance organization's existing coverage for individual or conversion coverage as determined by the type of coverage held in the insolvent health maintenance organization but at rates determined in accordance with the successor health maintenance organization's existing rating methodology. Successor health maintenance organizations which do not offer direct nongroup enrollment may aggregate all of the allocated nongroup members into one group for rating and coverage purposes. Coverage made available under this subsection shall be effective on the date the insolvency is declared.
(j) Any rehabilitation, liquidation, or conservation of a health maintenance organization shall be deemed to be the rehabilitation, liquidation, or conservation of an insurance company and shall be conducted under the supervision of the Commissioner pursuant to chapter 145 of this title.
(k)(1) Whenever the Commissioner determines that the financial condition of any health maintenance organization is such that its continued operation might be hazardous to its members, creditors, or the general public, or that it has violated any provision of this chapter, the Commissioner may, after notice and hearing, order the health maintenance organization to take such action as may be reasonably necessary to rectify such condition or violation, including one or more of the following:
(A) reduce the total amount of present and potential liability for benefits through reinsurance or other method approved by the Commissioner;
(B) reduce the volume of new business accepted;
(C) suspend or limit the writing of new business for a period of time;
(D) increase the health maintenance organization's capital and surplus by contribution; or
(E) take such other steps as the Commissioner may deem appropriate under the circumstances.
(2) If the Commissioner finds that member protection requires emergency action, the Commissioner may summarily order the health maintenance organization to take any action described in subdivision (1) of this subsection, provided that notice and hearing is issued as soon as practicable after such action is taken.
(l) The Commissioner shall adopt rules that establish solvency standards for provider-sponsored networks, including provider-sponsored organizations, for the Medicare Advantage program, as described in 42 U.S.C. § 1395w-21, in conformance with the solvency standards established by the Secretary of Health and Human Services under 42 U.S.C. § 1395w-26. Provider-sponsored networks shall be licensed under this chapter to offer a Medicare Advantage plan by complying with the solvency rules adopted under this subsection; except that a provider-sponsored network that offers any health plan other than or in addition to a Medicare Advantage plan shall comply with the solvency standards of this chapter instead of those adopted specifically for Medicare Advantage plans under this subsection. A provider-sponsored network licensed under this chapter shall not be required to offer any insurance product apart from Medicare Advantage. As used in this subsection, "provider-sponsored network" or "provider-sponsored organization" shall have the same definition as in 42 U.S.C. § 1395w-25(d).
(m) The Commissioner may enter into contracts with the Secretary of Health and Human Services for the administration of the Medicare Advantage program. (Added 1993, No. 30, § 7, eff. May 21, 1993; amended 1997, No. 159 (Adj. Sess.), § 4, eff. April 29, 1998; 2005, No. 36, § 18, eff. June 1, 2005.)
§ 5103. Precertificate activities
The Commissioner, in his or her discretion, may permit an applicant to contact potential members prior to the issuance of a certificate of authority, to discuss the health care services the applicant proposes to offer and the proposed evidences of coverage. (Added 1979, No. 117 (Adj. Sess.).)
§ 5104. Filing and approval of rates and forms; supplemental orders
(a)(1) A health maintenance organization which has received a certificate of authority under section 5102 of this title shall file and obtain approval of all policy forms and rates as provided in sections 4062 and 4062a of this title. This requirement shall include the filing of administrative retentions for any business in which the organization acts as a third party administrator or in any other administrative processing capacity. The Commissioner or the Green Mountain Care Board, as appropriate, may request and shall receive any information that the Commissioner or the Board deems necessary to evaluate the filing. In addition to any other information requested, the Commissioner or the Board shall require the filing of information on costs for providing services to the organization's Vermont members affected by the policy form or rate, including Vermont claims experience, and administrative and overhead costs allocated to the service of Vermont members. Prior to approval, there shall be a public comment period pursuant to section 4062 of this title. A health maintenance organization shall file a summary of rate filings pursuant to section 4062 of this title.
(2) The Commissioner or the Board shall refuse to approve the form of evidence of coverage, filing, or rate if it contains any provision which is unjust, unfair, inequitable, misleading, or contrary to the law of the State or plan of operation, or if the rates are excessive, inadequate or unfairly discriminatory, fail to protect the organization's solvency, or fail to meet the standards of affordability, promotion of quality care, and promotion of access pursuant to section 4062 of this title. No evidence of coverage shall be offered to any potential member unless the person making the offer has first been licensed as an insurance agent in accordance with chapter 131 of this title.
(b) In connection with a rate decision, the Board may also make reasonable supplemental orders and may attach reasonable conditions and limitations to such orders as the Board finds, on the basis of competent and substantial evidence, necessary to ensure that benefits and services are provided at reasonable cost under efficient and economical management of the organization. The Commissioner and, except as otherwise provided by 18 V.S.A. §§ 9375 and 9376, the Green Mountain Care Board, shall not set the rate of payment or reimbursement made by the organization to any physician, hospital, or health care provider. (Added 1979, No. 117 (Adj. Sess.); amended 1991, No. 166 (Adj. Sess.), § 15; 1993, No. 30, § 8, eff. May 21, 1993; 1993, No. 235 (Adj. Sess.), § 10b; 2011, No. 48, § 15d, eff. Jan. 1, 2012; 2011, No. 171 (Adj. Sess.), § 25a, eff. May 16, 2012; 2013, No. 79, § 5k, eff. Jan. 1, 2014.)
§ 5105. Examinations
(a) The Commissioner shall make an examination of the affairs of any health maintenance organization organized or holding a certificate of authority as a health maintenance organization in this State as often as the Commissioner deems it necessary, but not less frequently than once in every three years to assure that the financial and contractual obligations of the health maintenance organization are being met in accordance with Vermont law. The Commissioner may enlarge the aforesaid three-year period to five years, provided the health maintenance organization is subject to a comprehensive annual audit during such period of a scope satisfactory to the Commissioner, by independent auditors approved by the Commissioner. The Commissioner shall examine a health maintenance organization that is organized in another state as if it were organized in this State. In lieu of such examination, the Commissioner may accept an examination report on the company as prepared by the insurance department of the company's state of domicile. Prior to accepting an examination report from any foreign jurisdiction, the Commissioner shall determine that the examination was performed in a manner and using methods and criteria that are as stringent as those established for Vermont examinations. Nothing in this section shall restrict the Commissioner's power to examine a health maintenance organization when the Commissioner deems it to be in the best interests of members or policyholders.
(b) All financial and market conduct examinations shall be conducted pursuant to and in conformity with sections 3573, 3574, 3575, and 3576 of this title at the expense of the health maintenance organization and shall be conducted in accordance with guidelines, principles, manuals, instructions, and other procedures promulgated by the National Association of Insurance Commissioners, including the use of statutory accounting principles for financial examinations, together with any useful or necessary modifications or adaptation thereof required or approved by the Commissioner. Every health maintenance organization shall provide the Commissioner with all books and records relating to its operation, including books and records of any affiliate or subsidiary as defined in section 3681 of this title. For the purpose of examinations, the Commissioner may issue subpoenas, administer oaths to, and examine any person and the officers and agents of the health maintenance organization. (Added 1979, No. 117 (Adj. Sess.); amended 1993, No. 30, § 9, eff. May 21, 1993; 1999, No. 38, § 3, eff. May 20, 1999; 2009, No. 42, § 12.)
§ 5106. Annual report to the Commissioner
(a) Every organization subject to this chapter, annually, within 90 days of the close of its fiscal year, shall file a report with the Commissioner, said report verified by an appropriate official of the organization, showing its financial condition on the last day of the preceding fiscal year. The report shall be prepared in accordance with the National Association of Insurance Commissioners' Accounting Practices and Procedures Manual for health maintenance organizations and shall be in such general form and context, as approved by, and shall contain any other information required by the National Association of Insurance Commissioners together with any useful or necessary modifications or adaptations thereof required, approved, or accepted by the Commissioner for the type of organization to be reported upon, and as supplemented by additional information required by the Commissioner.
(b) A health maintenance organization shall, when determining liabilities, include an amount estimated in the aggregate to provide for any unearned premium and for the payment of all claims for health care expenditures which have been incurred, whether reported or unreported, which are unpaid and for which such organization is or may be liable, and to provide for the expense of adjustment or settlement of such claims. (Added 1979, No. 117 (Adj. Sess.); amended 1993, No. 30, § 10, eff. May 21, 1993; 2011, No. 171 (Adj. Sess.), § 29, eff. May 16, 2012.)
§ 5107. Powers of health maintenance organizations
(a) Health maintenance organizations may:
(1) Buy, sell, lease, encumber, construct, renovate, operate, or maintain hospitals, health care clinics, other health care facilities, and other real and personal property which is incidental to and reasonably necessary for the transaction of the business and for the accomplishment of the purposes of the organization if a certificate of need is obtained in accordance with 18 V.S.A. chapter 221.
(2) Furnish health care services through providers employed by or under contract with the organization. No new health care project shall be offered without first obtaining a certificate of need in accordance with 18 V.S.A. chapter 221.
(3) Contract with insurance companies licensed in this State or with health service corporations authorized to do business in this State for insurance, indemnity, or reimbursement for the cost of health care services furnished by the organization.
(4) Offer to its members, in addition to health care services, insured indemnity benefits. The Commissioner may require any health maintenance organization offering benefits under this subdivision to establish reserves for indemnity benefits or to form an affiliate or subsidiary corporation under chapter 101 of this title, whenever the Commissioner determines that such a requirement is in the best interests of members or policyholders. All of the provisions of subchapter 13 of chapter 101 shall apply to any holding company system that has a health maintenance organization as an affiliate.
(5) Receive from governmental or private agencies payments covering all or part of the cost of the health care services furnished by the organization.
(6) Enter into contracts to provide services which may include administrative claims processing services.
(7) Do all other things necessary for the accomplishment of the purposes of the organization.
(b) A health maintenance organization which has a net worth of greater than or equal to eight percent of total assets as last reported under section 5106 of this title and has reported positive earnings in two of the past three years shall provide the Commissioner with written notice within 90 days of the exercise of any power granted under this section that may significantly affect the financial soundness of the organization.
(c) A health maintenance organization which has a net worth of less than eight percent of total assets as last reported under section 5106 of this title or has not reported positive earnings in at least two of the past three years shall provide the Commissioner with 30 days prior written notice of any expenditure or financial commitment which in the aggregate will exceed one percent of total expenditures as of the last reporting period.
(d) Whenever the Commissioner has reasonable cause to believe that any health maintenance organization has committed or is engaged in or is about to commit or engage in any act, practice, or transaction that may subject it to delinquency proceedings, adversely affect its financial soundness or its Vermont members, or render the continuance of its business hazardous to the public or its members, he or she, after notice and hearing as provided under subsection 5102b(k) of this title may make such orders as are reasonably necessary to correct, eliminate or remedy such conduct, condition, or act.
(e) Any financial transaction which in the aggregate will exceed one percent of expenditures as last reported under section 5106 of this title is presumed to be a transaction which may significantly affect the financial soundness of the organization.
(f) For the sole purpose of applying the provisions, conditions, and limitations of this chapter and any other section of this title and Title 18 to a health maintenance organization formed as a limited liability company, the references in this chapter and any other section of this title and Title 18 applicable to a health maintenance organization formed as a corporation shall be applied in an equivalent manner to a health maintenance organization formed as a limited liability company or foreign limited liability company. The members of the limited liability company shall be treated in an equivalent manner as shareholders of a corporation. The ownership interests in the limited liability company shall be treated in an equivalent manner as the securities of a corporation. The managers of a limited liability company shall be treated in an equivalent manner as directors or executive officers of a corporation. The person signing the articles of organization of the limited liability company shall be treated in an equivalent manner as the incorporators of a corporation. Nothing in this section shall be construed to affect the tax status, tax elections, or tax benefits of a health maintenance organization formed as a limited liability company or of any of its members. Notwithstanding the application of this section to a health maintenance organization formed as a limited liability company, such limited liability company shall not be deemed to be a corporation for any purpose.
(g) [Repealed.] (Added 1979, No. 117 (Adj. Sess.); amended 1993, No. 30, § 11, eff. May 21, 1993; 1997, No. 54, §§ 10, 11, eff. June 26, 1997, eff. May 20, 1999; 2003, No. 53, § 26.)
§ 5107a. Application for continuing authority upon merger, consolidation, transfer of control, or sale of contracts
(a) If a health maintenance organization that annually writes more than $10 million of premium in this State intends to merge into or with or consolidate with, transfer more than 10 percent of its stock or other ownership interest, to sell or dispose of all or substantially all of its assets to, or transfer more than 25 percent of its Vermont contracts to any other person, that person may succeed on a continuing basis to the authority possessed by the health maintenance organization if:
(1) A plan of merger, consolidation, or operation and an application for continuing authority is approved by the Commissioner. The application for continuing authority must comply with subsections 5102(b) and (c) of this title. The applicant shall provide such additional information as the Commissioner may require.
(2) The proposed surviving or acquiring person, if a health maintenance organization within the meaning of subdivision 5101(2) of this title, is qualified to obtain a certificate of authority under the provisions of this chapter.
(3) The proposed surviving or acquiring person is in compliance with all of the requirements of this chapter and, if licensed or authorized under any other provision of this title, is in compliance with all applicable laws of this State.
(4) The Commissioner finds that the transaction will promote the general good of the members of the health maintenance organization and the public, taking into account the effect the transaction will have on competition in this State and that the applicant is in compliance with this section.
(5) The health maintenance organization has obtained all required regulatory approvals from any other state with jurisdiction over the transaction or the Commissioner's approval is effective upon the issuance of such approvals.
(b) As used in this section, a "health maintenance organization" includes a "health maintenance organization," as defined in subdivision 5101(2) of this title, that is authorized to transact business in this State, and any person who, directly or indirectly, has the power to direct or control the policies or management of a health maintenance organization that is authorized to transact business in this State, whether through an ownership interest or otherwise and the health maintenance organization is affected by a transaction described in subsection (a) of this section. Control shall be presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing 10 percent or more of the voting interests of a health maintenance organization or has the power, directly and indirectly, to appoint one or more directors of the health maintenance organization.
(c) In approving the plan or application or in making findings under this section, the Commissioner may consider and rely on the record of any previous proceeding or order of the commissioner of the state of domicile of a health maintenance organization with respect to the transaction.
(d) The Commissioner may exempt from the provisions of this section any transaction that does not have a material impact on Vermont members. (Added 1997, No. 159 (Adj. Sess.), § 5, eff. April 29, 1998.)
§ 5108. Prohibited practices
Section 4724 of this title relating to unfair trade practices shall be construed to apply to health maintenance organizations, except to the extent that the Commissioner determines that the nature of health maintenance organizations renders such section clearly inappropriate. (Added 1979, No. 117 (Adj. Sess.).)
§ 5109. Sanctions
Upon satisfactory evidence that any health maintenance organization has violated any law or regulation or in any way has failed in meeting its financial and contractual obligations to its members, including quality assurance as provided by 18 V.S.A. § 9414, the Commissioner may, in his or her discretion, pursue any one or more of the following courses of action:
(1) Suspend the certificate of authority to operate as a health maintenance organization under this chapter. During the period of suspension, the organization shall not enroll any additional members except new employees of any employer whose employees are enrolled in the health maintenance organization by virtue of their employment, newborn children or other newly acquired dependents of existing members and shall not engage in any advertising or solicitation whatever.
(2) Revoke the certificate of authority to operate as a health maintenance organization under this chapter. When the certificate of authority is revoked, such organization shall proceed under the supervision of the Commissioner, immediately following the effective date of the order of revocation, to wind up its affairs, and shall conduct no further business except as may be essential to the orderly conclusion of the affairs of such organization. It shall engage in no further advertising or solicitation whatsoever. The Commissioner may, by written order, permit such further operation of the organization as he or she may find to be in the best interest of members to the end that members will be afforded the greatest practical opportunity to obtain continuing health care coverage.
(3) Impose an administrative penalty of not more than $5,000.00 for each and every unlawful act committed; each violation shall constitute a separate fineable offense.
(4) Issue an administrative order requiring the health maintenance organization: to cease or modify inappropriate conduct or practices by it or any of the personnel employed or associated with it; to fulfill its contractual and financial obligations to its members.
(5) When the Commissioner has cause to believe that grounds for the denial of an application for a certificate of authority exist or that grounds for the suspension or revocation of a certificate of authority exist, the Commissioner shall notify the health maintenance organization in writing specifically stating the grounds for denial, suspension, or revocation and fixing a time of at least 30 days thereafter for a hearing on the matter. (Added 1979, No. 117 (Adj. Sess.); amended 1993, No. 30, § 12, eff. May 21, 1993; 1995, No. 167 (Adj. Sess.), § 23.)
§ 5110. Name of health maintenance organization
No health maintenance organization, unless licensed as an insurer, may use in its name, evidences of coverage, contracts, or literature, any of the words "insurance," "casualty," "surety," "mutual," or any other words descriptive of the insurance, casualty, or surety business or deceptively similar to the name or description of any insurance or surety corporation doing business in this State. (Added 1979, No. 117 (Adj. Sess.).)
§ 5111. Rules
The Commissioner may, after notice and hearing, adopt reasonable rules under 3 V.S.A. chapter 25, as are necessary or proper to carry out the provisions of this chapter. (Added 1979, No. 117 (Adj. Sess.); amended 2015, No. 23, § 86.)
§ 5112. Statutory construction and relationship to other laws
Except as provided in this chapter, and except as provided in sections 3315, 4080a, 4080b, and 4080f, and subchapter 2 of chapter 112 of this title, provisions of the insurance laws and specifically provisions of chapters 123 and 125 of this title shall not be applicable to any health maintenance organization granted a certificate of authority under this chapter. (Added 1979, No. 117 (Adj. Sess.); amended 1991, No. 52, § 5, eff. June 6, 1991; 1991, No. 160 (Adj. Sess.), § 44, eff. May 11, 1992; 1993, No. 30, § 13, eff. May 21, 1993; 2001, No. 71, § 10a, eff. June 16, 2001; 2005, No. 191 (Adj. Sess.), § 19.)
§ 5113. Severability
If any section, term, or provision of this chapter shall be adjudged invalid for any reason, such judgment shall not affect, impair, or invalidate any other section, term, or provision of this chapter, but the remaining section, terms, and provisions shall be and remain in full force and effect. (Added 1979, No. 117 (Adj. Sess.).)
§ 5114. Part-time employees
A health maintenance organization shall not exclude part-time employees or refuse to offer the same benefits to part-time employees as it offers to the employee groups of which the part-time employees would be members if they were full-time employees. The insurer shall offer to include the part-time employees as part of the employer's employee group, at the full rate to be paid by the employer, at a rate prorated between the employer and the employee or at the employee's expense. "Part-time employee" means any employee who works a minimum of at least 17 1/2 hours per week. (Added 1989, No. 34, § 4.)
§ 5115. Duty of nonprofit health maintenance organizations
Any nonprofit health maintenance organization subject to this chapter shall offer nongroup plans to individuals in accordance with section 4080b of this title without discrimination based on age, gender, industry, and medical history, except as allowed by subdivisions 4080a(h)(2)(B) and 4080b(h)(2)(B) of this title. (Added 1991, No. 160 (Adj. Sess.), § 45, eff. July 1, 1993; amended 2005, No. 191 (Adj. Sess.), § 54.)