The Vermont Statutes Online

Title 8 : Banking and Insurance

Chapter 139 : Health Maintenance Organization

• § 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 that 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 chapter 101, subchapter 13 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 that 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 that 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 that 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 that 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 that in the aggregate will exceed one percent of expenditures as last reported under section 5106 of this title is presumed to be a transaction that 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; 2021, No. 105 (Adj. Sess.), § 241, eff. July 1, 2022.)