IC 27-13-34
Chapter 34. Limited Service Health Maintenance Organizations
IC 27-13-34-1 "Enrollee" defined
Sec. 1. (a) As used in this chapter, "enrollee" means an individual
who is entitled to limited health services under a contract with an
entity authorized to provide or arrange for limited health services
under this chapter.
(b) The term includes the dependent of an individual described in
subsection (a). As added by P.L.26-1994, SEC.25.
IC 27-13-34-2 "Evidence of coverage" defined
Sec. 2. As used in this chapter, "evidence of coverage" means the
certificate, agreement, or contract issued under section 13 of this
chapter setting forth the coverage to which an enrollee is entitled. As added by P.L.26-1994, SEC.25.
IC 27-13-34-3 "Limited health services" defined
Sec. 3. (a) As used in this chapter, "limited health services" refers
to:
(1) dental care services;
(2) vision care services;
(3) mental health services;
(4) substance abuse services;
(5) pharmaceutical services;
(6) podiatric care services; and
(7) other services that the commissioner determines to be
limited health services.
(b) The term does not include hospital or emergency services,
except as those services are provided incident to a limited health
service. As added by P.L.26-1994, SEC.25.
IC 27-13-34-4 "Limited service health maintenance organization" defined
Sec. 4. (a) As used in this chapter, "limited service health
maintenance organization" means a corporation, partnership, limited
liability company, or other entity that undertakes to provide or
arrange a limited health service on a prepayment basis or other basis.
(b) The term does not include a provider or an entity when
providing or arranging for the provision of limited health services
under a contract with a limited service health maintenance
organization. As added by P.L.26-1994, SEC.25.
IC 27-13-34-5 "Provider" defined
Sec. 5. As used in this chapter, "provider" means a physician, a
dentist, an optometrist, a health facility, or other person or institution
that is licensed or otherwise authorized to deliver or furnish limited
health service. As added by P.L.26-1994, SEC.25.
IC 27-13-34-6 "Subscriber" defined
Sec. 6. As used in this chapter, "subscriber" means a person
whose employment status or other status, except for family
dependency, is the basis for eligibility for limited health services
under a contract with an entity authorized to provide or arrange for
limited health services under this chapter. As added by P.L.26-1994, SEC.25.
IC 27-13-34-7 Certificate of authority required; foreign entities
Sec. 7. (a) After December 31, 1994, a person, corporation,
partnership, limited liability company, or other entity may not
operate a limited service health maintenance organization in Indiana
without obtaining and maintaining a certificate of authority from the
commissioner under this chapter.
(b) A for-profit or nonprofit corporation organized under the laws
of another state, other than a foreign corporation defined under
IC 27-1-2-3, may obtain a certificate of authority to operate a limited
service health maintenance organization in Indiana if the foreign
corporation is authorized to do business in Indiana under IC 23-1-49
or IC 23-17-26 and complies with this chapter.
(c) A foreign corporation (as defined in IC 27-1-2-3) may obtain
a certificate of authority to operate a limited service health
maintenance organization in Indiana if the foreign corporation
complies with this chapter.
(d) A foreign or alien limited service health maintenance
organization granted a certificate of authority under this chapter has
the same but not greater rights and privileges than a domestic limited
service health maintenance organization. As added by P.L.26-1994, SEC.25. Amended by P.L.203-2001,
SEC.32.
IC 27-13-34-8 Application for certificate of authority; requirements
Sec. 8. (a) An application for a certificate of authority to operate
a limited service health maintenance organization must be filed with
the commissioner on a form prescribed by the commissioner. An
application must be verified by an officer or authorized
representative of the applicant and must set forth, or be accompanied
by, the following:
(1) A copy of the applicant's basic organizational document,
such as the articles of incorporation, articles of association,
partnership agreement, trust agreement, articles of organization,
or other applicable documents, and all amendments to those
documents.
(2) A copy of all bylaws, rules and regulations, or similar
documents, if any, regulating the conduct of the internal affairs
of the applicant.
(3) A list of the names, addresses, official positions, and
biographical information of the individuals who are to be
responsible for conducting the affairs and daily operations of
the applicant, including the following:
(A) All members of the board of directors, board of trustees,
executive committee, or other governing board or
committee.
(B) The principal officers.
(C) Any person or entity owning or having the right to
acquire at least ten percent (10%) of the voting securities of
the applicant.
(D) In the case of a partnership or an association, the
partners or members of the partnership or association.
(E) In the case of a limited liability company, the managers
or members of the limited liability company.
(4) A statement generally describing the applicant, the facilities
and personnel of the applicant, and the limited health service or
services that the applicant will offer.
(5) A copy of the form of any contract that has been made or is
to be made between the applicant and any providers regarding
the provision of limited health services to enrollees.
(6) A copy of the form of any contract that has been made or is
to be made between the applicant and any person referred to in
subdivision (3).
(7) A copy of the form of any contract that has been made or is
to be made between the applicant and any person, corporation,
partnership, or other entity for the performance of any functions
on behalf of the applicant, including the following:
(A) Marketing.
(B) Administration.
(C) Enrollment.
(D) Investment management.
(E) Subcontracting for the provision of limited health
services to enrollees.
(8) A copy of the form of any contract that is to be issued to
employers, unions, trustees, or other organizations or
individuals, and a copy of any form of evidence of coverage to
be issued to subscribers.
(9) Subject to subsection (b), a copy of the most recent financial
statements of the applicant, audited by an independent certified
public accountant.
(10) A copy of the financial plan of the applicant, including:
(A) a projection of anticipated operating results for at least
three (3) years; and
(B) a statement of the sources of working capital and any
other sources of funding and provisions for contingencies.
(11) A description of the proposed method of marketing.
(12) A statement acknowledging that all lawful process in any
legal action or proceeding against the applicant on a cause of
action arising in Indiana is valid if served in accordance with
the Indiana Rules of Trial Procedure.
(13) A description of the complaint procedures to be established
and maintained under IC 27-13-10.
(14) A description of the quality assessment and utilization
review procedures to be used by the applicant.
(15) A description of how the applicant will comply with
sections 16 and 17 of this chapter.
(16) The fee for the issuance of a certificate of authority
required by section 23 of this chapter.
(17) A written waiver of the applicant's rights under federal
bankruptcy laws.
(18) Other information that the commissioner reasonably
requires to make the determinations required by this chapter.
(19) If the applicant is not domiciled in Indiana, an executed
power of attorney appointing the commissioner, the
commissioner's successors in office, and authorized deputies of
the commissioner as the true and lawful attorney of the
applicant in and for Indiana upon whom all lawful process in
any legal action or proceeding against the limited service health
maintenance organization on a cause of action arising in Indiana
may be served.
(b) If the financial affairs of the parent company of the applicant
are audited by independent certified public accountants but those of
the applicant are not, an applicant may satisfy the requirement set
forth in subsection (a)(9) by including with the application the most
recent audited financial statement of the applicant's parent company,
certified by an independent certified public accountant, attached to
which shall be consolidating financial statements of the applicant,
unless the commissioner determines that additional or more recent
financial information is required for the proper administration of this
chapter. As added by P.L.26-1994, SEC.25.
IC 27-13-34-9 Issuance of certificate of authority; application deficiencies; denial
of application
Sec. 9. (a) After receiving an application filed under section 8 of
this chapter, the commissioner shall review the application and notify
the applicant of any deficiencies in the application.
(b) The commissioner shall issue a certificate of authority to an
applicant if the following conditions are met:
(1) The requirements of section 8 of this chapter have been
fulfilled.
(2) The individuals responsible for conducting the affairs of the
applicant are competent, trustworthy, possess good reputations,
and have had appropriate experience, training, or education.
(3) The applicant is financially responsible and may reasonably
be expected to meet its obligations to enrollees and to
prospective enrollees. In making this determination, the
commissioner may consider:
(A) the financial soundness of the arrangements of the
applicant for limited health services;
(B) the adequacy of the applicant's working capital, other
sources of funding, and provisions for contingencies;
(C) any agreement for paying the cost of the limited health
services or for alternative coverage in the event of
insolvency of the limited service health maintenance
organization; and
(D) the manner in which the requirements of sections 16 and
17 of this chapter have been fulfilled.
(4) The agreements with providers for the provision of limited
health services contain the provisions required by section 15 of
this chapter.
(5) Any deficiencies identified by the commissioner have been
corrected.
(c) If an application for a certificate of authority is denied, the
commissioner shall notify the applicant and shall specify in the
notice the reasons for the denial of the application. Within thirty (30)
days after receiving the notice, the applicant may request a hearing
before the commissioner under IC 4-21.5. As added by P.L.26-1994, SEC.25.
IC 27-13-34-10 Powers of limited service health maintenance organization
Sec. 10. (a) Subject to subsection (b), the powers of a limited
service health maintenance organization include the following:
(1) The purchase, lease, construction, renovation, operation, or
maintenance of:
(A) medical facilities that will provide limited health
services;
(B) equipment for medical facilities providing limited health
services; and
(C) other property reasonably required for the principal
office of the limited service health maintenance organization
or for purposes necessary in the transaction of the business
of the organization.
(2) Engaging in transactions between affiliated entities,
including loans and the transfer of responsibility under any or
all contracts:
(A) between affiliates; or
(B) between the limited service health maintenance
organization and the parent organization of the limited
service health maintenance organization.
(3) The furnishing of limited health services through the
following:
(A) Providers.
(B) Provider associations.
(C) Agents for providers who are under contract with or are
employed by the limited service health maintenance
organization. The contracts with providers, provider
associations, or agents for providers may include fee for
service, cost plus, capitation, or other payment or
risk-sharing agreements.
(4) Contracting with any person for the performance on behalf
of the limited service health maintenance organization of
certain functions, including:
(A) marketing;
(B) enrollment; and
(C) administration.
(5) Contracting with:
(A) an insurance company licensed in Indiana; or
(B) an authorized reinsurer for the provision of insurance,
indemnity, or reimbursement against the cost of health care
services provided by the limited service health maintenance
organization.
(6) The offering of point-of-service products for the limited
health services for which the limited service health maintenance
organization is licensed so long as the limited service health
maintenance organization complies with the reinsurance or ratio
requirements of IC 27-13-13-8.
(7) The joint marketing of products with:
(A) an insurance company that is licensed in Indiana; or
(B) a health maintenance organization that is authorized to
conduct business in Indiana;
if the company that is offering each product is clearly identified.
(8) Providing limited health services at the expense of a
self-funded plan.
(b) Nothing in this section qualifies an asset of a prepaid limited
health service organization as an admitted asset. As added by P.L.26-1994, SEC.25.
IC 27-13-34-11 Modification of documents; filing; disapproval
Sec. 11. (a) Before making any material modification of any
matter or document furnished under section 8 of this chapter, a
limited service health maintenance organization shall file with the
commissioner:
(1) a notice of the modification; and
(2) supporting documents that are necessary to fully explain the
modification.
(b) If a limited service health maintenance organization desires to
add one (1) or more limited health services, it must:
(1) file a notice with the commissioner;
(2) submit the information required by section 8 of this chapter
concerning each limited health service to be added, if that
information is different from the information filed with the
application of the limited service health maintenance
organization; and
(3) demonstrate compliance with sections 16, 17, 18, and 23 of
this chapter with respect to each limited health service to be
added by the organization.
(c) If the commissioner does not disapprove a filing under
subsection (a) or (b) within thirty (30) days after the commissioner
receives the filing, or within any period of extension granted by the
commissioner, the filing shall be deemed approved.
(d) If a filing under subsection (a) or (b) is disapproved, the
commissioner shall:
(1) notify the limited service health maintenance organization
of the disapproval of the filing in writing deposited in the
United States mail addressed to the limited service health
maintenance organization; and
(2) specify the reasons for disapproval of the filing in the
notice.
(e) Within thirty (30) days after it receives a notice of disapproval
under subsection (d), the limited service health maintenance
organization may request a hearing before the commissioner under
IC 4-21.5 concerning the disapproval of the filing. If, not more than
thirty (30) days after receiving the notice from the commissioner, the
limited service health maintenance organization requests a hearing,
the commissioner shall hold a hearing upon not less than ten (10)
days notice to the limited service health maintenance organization. As added by P.L.26-1994, SEC.25.
IC 27-13-34-12 Applicable statutes
Sec. 12. A limited service health maintenance organization
operated under this chapter is subject to the following:
(1) IC 27-1-36 concerning risk based capital, unless exempted
by the commissioner under IC 27-1-36-1.
(2) IC 27-13-8, except for IC 27-13-8-2(a)(6) concerning
reports.
(3) IC 27-13-9-3 concerning termination of providers.
(4) IC 27-13-10-1 through IC 27-13-10-3 concerning grievance
procedures.
(5) IC 27-13-11 concerning investments.
(6) IC 27-13-15-1(a)(2) through IC 27-13-15-1(a)(3) concerning
gag clauses in contracts.
(7) IC 27-13-21 concerning producers.
(8) IC 27-13-29 concerning statutory construction and
relationship to other laws.
(9) IC 27-13-30 concerning public records.
(10) IC 27-13-31 concerning confidentiality of medical
information and limitation of liability.
(11) IC 27-13-36-5 and IC 27-13-36-6 concerning referrals to
out of network providers and continuation of care.
(12) IC 27-13-40 concerning comparison sheets of services
provided by the limited service health maintenance
organization. As added by P.L.26-1994, SEC.25. Amended by P.L.191-1997,
SEC.14; P.L.69-1998, SEC.12; P.L.133-1999, SEC.8; P.L.51-2002,
SEC.12.
IC 27-13-34-13 Evidence of coverage; required information
Sec. 13. (a) Every subscriber of a limited service health
maintenance organization shall be issued an evidence of coverage in
electronic or paper form, which must contain a clear and complete
statement of the following:
(1) The limited health services to which each enrollee is
entitled.
(2) Any limitation of the services, kinds of services, or benefits
to be provided.
(3) Any exclusions, including any copayment or other charges.
(4) Where and in what manner information is available as to
where and how services may be obtained.
(5) The method for resolving complaints.
(b) Any amendment to the evidence of coverage may be provided
to the subscriber in a separate document in electronic or paper form.
(c) A limited service health maintenance organization shall issue
the evidence of coverage described in subsection (a) and an
amendment described in subsection (b) in paper form upon the
request of the subscriber.
(d) A limited service health maintenance organization shall
include in the limited service health maintenance organization's
enrollment materials information concerning the manner in which a
subscriber may:
(1) obtain an evidence of coverage; and
(2) request the evidence of coverage in paper form. As added by P.L.26-1994, SEC.25. Amended by P.L.125-2005,
SEC.8.
IC 27-13-34-14 Examinations by commissioner
Sec. 14. (a) The commissioner may examine a limited service
health maintenance organization as often as is reasonably necessary
to protect the interests of Indiana citizens. However, an examination
of a limited service health maintenance organization domiciled in
Indiana must be conducted at least one (1) time every three (3) years.
(b) A limited service health maintenance organization:
(1) shall make its relevant books and records, and the books and
records in its custody and control, available for examination
under this section; and
(2) in every way cooperate with the commissioner to facilitate
the examination.
(c) The expenses of an examination under this section shall be
paid by the organization being examined.
(d) Instead of conducting an examination of a limited service
health maintenance organization that is not domiciled in Indiana, the
commissioner may accept the report of an examination made by the
chief administrative officer who regulates insurance in another state,
if the other state is accredited by the National Association of
Insurance Commissioners. As added by P.L.26-1994, SEC.25.
IC 27-13-34-15 Required contract terms and conditions; exemptions
Sec. 15. All contracts with providers or with entities
subcontracting for the provision of limited health services to
enrollees on a prepayment basis or other basis must contain, or shall
be construed to contain, the following terms and conditions:
(1) If the limited service health maintenance organization fails
to pay for limited health services for any reason whatsoever,
including insolvency or breach of this contract, the enrollees
shall not be liable to the provider for any sums owed to the
provider under this contract.
(2) No provider or agent, trustee, representative, or assignee of
a provider may maintain an action at law or attempt to collect
from the enrollee sums that the limited service health
maintenance organization owes to the provider.
(3) These provisions do not prohibit the collection of:
(A) uncovered charges consented to by enrollees; or
(B) copayments;
from enrollees.
(4) The contract may not provide for a financial or other penalty
to a primary care provider for making a referral permitted under
IC 27-13-36-5(a), but may provide for reasonable cost sharing
between the primary care provider and the limited service
health maintenance organization for the additional costs
incurred as a result of services provided by an out of network
provider.
(5) These provisions survive the termination of this contract,
regardless of the reason for the termination.
(6) For not more than ninety (90) days after the termination of
this contract, the provider must complete procedures in progress
on an enrollee receiving treatment for a specific condition, at
the same schedule of copayment or other applicable charge that
is in effect on the effective date of termination of the contract.
(7) An amendment to the provisions of this contract set forth in
subdivisions (1) through (6) must be:
(A) submitted to; and
(B) approved by;
the commissioner before it becomes effective. As added by P.L.26-1994, SEC.25. Amended by P.L.69-1998,
SEC.13. IC 27-13-34-16 "Net worth" and "uncovered expense" defined; computation of net
worth; minimum net worth
Sec. 16. (a) As used in this section, "net worth" means the excess
of total assets over total liabilities, excluding liabilities that have
been subordinated in a manner acceptable to the commissioner.
(b) For the purposes of computing net worth, the total assets must
be reduced by the value assigned to the following intangible assets:
(1) Goodwill.
(2) Going concern value.
(3) Organizational expense.
(4) Start-up costs.
(5) Long term prepayments of deferred charges.
(6) Nonreturnable deposits.
(7) Obligations of officers, directors, owners, or affiliates,
except short term obligations of affiliates for goods or services
that:
(A) arise in the normal course of business;
(B) are payable on the same terms as equivalent transactions
with nonaffiliates; and
(C) are not past due.
(c) As used in this section, "uncovered expense" means the cost
of health care services:
(1) that are the obligation of a limited service health
maintenance organization;
(2) for which an enrollee may be liable in the event of the
insolvency of the organization; and
(3) for which alternative arrangements acceptable to the
commissioner have not been made to cover the costs.
(d) For purposes of the definition of "uncovered expense" set
forth in subsection (c), costs incurred by a provider who has agreed
in writing not to bill enrollees, except for permissible supplemental
charges, shall be considered a covered expense.
(e) Each limited service health maintenance organization must, at
all times, have and maintain net worth equal to the greater of:
(1) fifty thousand dollars ($50,000); or
(2) two and one-half percent (2.5%) of the annual gross
subscription income of the organization, up to a maximum of
two hundred fifty thousand dollars ($250,000).
(f) A limited service health maintenance organization shall
maintain as a claim or loss reserve, in cash or obligations of the
United States government, assets sufficient to discharge all liabilities
on all uncovered expenses arising under policies issued.
(g) The commissioner may adopt rules under IC 4-22-2 to further
define whether and to what extent the assets of a limited service
health maintenance organization may be considered to be admitted
assets for the purposes of complying with the requirements of this
chapter. As added by P.L.26-1994, SEC.25. IC 27-13-34-17 Required deposit
Sec. 17. (a) Each limited service health maintenance organization
shall deposit in a joint-name account with:
(1) the commissioner; or
(2) any bank or bank and trust company or other financial
institution acceptable to the commissioner through which a
custodial or controlled account is used;
cash, securities acceptable to the commissioner, or any combination
of these, in an amount equal to fifty thousand dollars ($50,000).
(b) For the purposes of section 16 of this chapter:
(1) a deposit made by an organization under this section shall be
treated as an admitted asset of the organization in the
determination of net worth; and
(2) all income from deposits of an organization under this
section shall be an asset of the organization.
(c) An organization may withdraw:
(1) a deposit made under this section; or
(2) any part of the deposit;
after making a substitute deposit of equal amount and value.
(d) Any obligations of the United States government deposited
with the commissioner under this section must be approved by the
commissioner before being substituted under subsection (c).
(e) The deposit made by a limited service health maintenance
organization under this section shall be used to protect the interest of
the enrollees of the organization and to assure continuation of limited
health care services to enrollees of a limited service health
maintenance organization that is in rehabilitation or conservation.
(f) If a limited service health maintenance organization is placed
in rehabilitation or liquidation, the deposit made by the organization
under this section shall be an asset subject to IC 27-9.
(g) The commissioner is not required to but may reduce or
eliminate the deposit requirement of this section for a limited service
health maintenance organization if the organization:
(1) has made an acceptable deposit with the state or jurisdiction
in which the organization is domiciled for the protection of all
enrollees, wherever located; and
(2) delivers to the commissioner a certificate to that effect,
authenticated by the appropriate state official holding the
deposit. As added by P.L.26-1994, SEC.25.
IC 27-13-34-18 Fidelity bonds; deposit in place of bond
Sec. 18. (a) Except as provided in subsection (c), a limited service
health maintenance organization shall maintain in force a fidelity
bond in its own name on its officers and employees:
(1) in an amount not less than fifty thousand dollars ($50,000);
or
(2) in any other amount prescribed by the commissioner.
(b) The fidelity bond required by this section must be issued by an
insurance company not affiliated in any way with the limited service
health maintenance organization, that is licensed to do business in
Indiana. However, if a fidelity bond is not available from an
insurance company that holds a certificate of authority in Indiana, a
limited service health maintenance organization may satisfy the
requirement of this section by maintaining a fidelity bond procured
by a surplus lines insurance producer not affiliated in any way with
the limited service health maintenance organization who holds a
license issued under IC 27-1-15.8.
(c) Instead of maintaining a fidelity bond under subsection (a), a
limited service health maintenance organization may deposit with the
commissioner:
(1) cash;
(2) certificates of deposit;
(3) United States government obligations acceptable to the
commissioner;
(4) any other securities acceptable to the commissioner of the
types referred to in IC 27-13-11-1; or
(5) a combination of the items described in subdivisions (1)
through (4).
A deposit made under this subsection is in addition to any other
required deposit, and must also be maintained in joint custody with
the commissioner in the amount and subject to the same conditions
required for a fidelity bond under this section. As added by P.L.26-1994, SEC.25. Amended by P.L.132-2001,
SEC.19; P.L.178-2003, SEC.87.
IC 27-13-34-19 Annual reports; additional reports
Sec. 19. (a) On or before March 1 of each year, a limited service
health maintenance organization shall file with the commissioner a
report that covers the preceding calendar year. The report must be:
(1) made on forms prescribed by the commissioner; and
(2) verified by at least two (2) principal officers of the limited
service health maintenance organization.
(b) In addition to the report required by subsection (a), a limited
service health maintenance organization shall file with the
commissioner on or before June 1 of each year an audited financial
statement of the limited service health maintenance organization for
the preceding calendar year.
(c) The commissioner may require any additional reports
necessary to enable the commissioner to carry out the duties of the
commissioner under this chapter. As added by P.L.26-1994, SEC.25.
IC 27-13-34-20 Suspension or revocation of certificate of authority
Sec. 20. (a) The commissioner may suspend or revoke the
certificate of authority issued to a limited service health maintenance
organization under this chapter or deny an application submitted
under this chapter upon determining that any of the following
conditions exist:
(1) The limited service health maintenance organization is
operating:
(A) significantly in contravention of the basic organizational
document of the organization; or
(B) in a manner contrary to that described in and reasonably
inferred from any other information submitted under section
8 of this chapter;
unless amendments to the organization's submissions have been
filed and authorized under section 11 of this chapter.
(2) The limited service health maintenance organization issues
an evidence of coverage that does not comply with the
requirements of section 13 of this chapter.
(3) The limited service health maintenance organization is
unable to fulfill its obligations to furnish limited health
services.
(4) The limited service health maintenance organization is not
financially responsible and may reasonably be expected to be
unable to meet its obligations to enrollees or prospective
enrollees.
(5) The net worth of the limited service health maintenance
organization is less than that required by section 16 of this
chapter, or the limited service health maintenance organization
has failed to correct any deficiency in its net worth as required
by the commissioner.
(6) The limited service health maintenance organization has
failed to implement in a reasonable manner the grievance
system required by IC 27-13-10.
(7) The continued operation of the limited service health
maintenance organization would be hazardous to the enrollees
of the organization.
(8) The limited service health maintenance organization has
otherwise failed to comply with this chapter.
(b) The commissioner may suspend or revoke a certificate of
authority or deny an application for a certificate of authority by
written order sent to the limited service health maintenance
organization by certified mail or registered mail. The written order
shall state the grounds for the suspension, revocation, or denial. A
limited service health maintenance organization may request in
writing a hearing within thirty (30) days after mailing of the order.
If the limited service health maintenance organization requests a
hearing within the time specified, the commissioner shall hold a
hearing, which may not be less than twenty (20) days or more than
sixty (60) days after the date of the notice for a hearing on the matter
under IC 4-21.5.
(c) Immediately after the certificate of authority of a limited
service health maintenance organization is revoked, the organization
shall proceed to wind up its affairs. An organization whose
certificate is revoked:
(1) shall not conduct further business except as may be essential
to the orderly conclusion of the affairs of the organization; and
(2) shall not engage in further advertising or solicitation.
However, the commissioner may, by written order, permit the further
operation of the organization as the commissioner may find to be in
the best interest of enrollees, to the end that enrollees will be
afforded the greatest practical opportunity to obtain continuing
limited health services. As added by P.L.26-1994, SEC.25.
IC 27-13-34-21 Chapter violations; fines and penalties
Sec. 21. (a) In place of any other penalty specified in this chapter,
or when no penalty is specifically provided, whenever any limited
service health maintenance organization or other person, corporation,
partnership, limited liability company, or entity subject to this
chapter has been found to have violated any provision of this chapter,
the commissioner may:
(1) issue and cause to be served upon the organization, person,
or entity charged with the violation a copy of the findings and
an order requiring the organization, person, or entity to cease
and desist from engaging in the act or practice that constitutes
the violation; and
(2) impose a monetary penalty of not more than two thousand
five hundred dollars ($2,500) for each violation, but not to
exceed an aggregate penalty of twenty-five thousand dollars
($25,000).
(b) A limited service health maintenance organization may appeal
any action taken by the commissioner under this section within thirty
(30) days after receiving notice of the action by requesting a hearing
before the commissioner under IC 4-21.5. As added by P.L.26-1994, SEC.25.
IC 27-13-34-22 Supervision, rehabilitation, or liquidation; remedies and measures
Sec. 22. (a) Any supervision, rehabilitation, or liquidation of a
limited service health maintenance organization shall be considered
to be the supervision, rehabilitation, or liquidation of an insurance
company and shall be conducted under IC 27-9.
(b) A limited service health maintenance organization is not
subject to IC 27-6-8 or IC 27-8-8.
(c) The remedies and measures available to the commissioner
under this chapter are in addition to and not in the place of the
remedies and measures available to the commissioner under IC 27-9. As added by P.L.26-1994, SEC.25.
IC 27-13-34-23 Fees
Sec. 23. (a) A limited service health maintenance organization
subject to this chapter shall pay to the commissioner for deposit into
the department of insurance fund established by IC 27-1-3-28 the
following fees:
(1) For filing an application for a certificate of authority or an
amendment to an application, three hundred fifty dollars ($350).
(2) For filing each annual report, fifty dollars ($50).
(b) In addition to the fees required by subsection (a), a limited
service health maintenance organization subject to this chapter must
pay the fees required by IC 27-1-3-15. As added by P.L.26-1994, SEC.25. Amended by P.L.173-2007,
SEC.45; P.L.234-2007, SEC.199.
IC 27-13-34-24 Dental care services and director; review of adverse decisions;
complaints
Sec. 24. (a) A limited service health maintenance organization
that provides dental care services shall appoint a dental director who
has an unlimited license to practice dentistry under IC 25-14 or an
equivalent license issued by another state.
(b) The dental director appointed under subsection (a) is
responsible for oversight of treatment policies, protocols, quality
assurance activities, credentialing of participating providers, and
utilization management decisions of the limited service health
maintenance organization.
(c) A limited service health maintenance organization that
provides dental care services shall contract with or employ at least
one (1) individual who holds an unlimited license to practice
dentistry under IC 25-14 or an equivalent license issued by another
state to do the following:
(1) Develop, in consultation with a group of appropriate
providers, the limited service health maintenance organization's
treatment policies, protocols, and quality assurance activities.
(2) Respond when a treating provider requests in writing that a
dentist reconsider an adverse utilization review decision.
(d) A limited service health maintenance organization that
provides dental care services that receives a written request for
reconsideration of an adverse utilization review decision from a
treating provider shall:
(1) review the decision as expeditiously as possible; and
(2) provide a response to the treating provider not more than ten
(10) business days after receiving the request.
(e) A limited service health maintenance organization that
provides dental care services shall provide participating providers
with an opportunity to comment on the following:
(1) Treatment policies.
(2) Protocols.
(3) Quality assurance activities.
(4) Credentialing policies and procedures.
(5) Utilization management policies and procedures. As added by P.L.91-2000, SEC.1. IC 27-13-34-26 Complaints; records
Sec. 26. (a) The department shall maintain records concerning
complaints filed against a limited service health maintenance
organization that provides dental care services.
(b) The department shall classify complaints described in
subsection (a) in categories according to the National Association of
Insurance Commissioners standardized complaint report procedures.
(c) The department shall classify the disposition of complaints in
each category by:
(1) number of complaints for which corrective action is
considered necessary by the department; and
(2) number of complaints classified by National Association of
Insurance Commissioners disposition codes.
(d) The department shall make information specified in this
section available to the public in a form that does not identify any
specific individual.
(e) A limited service health maintenance organization that
provides dental care services may not take any retaliatory action,
including cancellation or refusal to renew a participating provider
contract, individual contract, or group contract, solely because a
participating provider, enrollee, or individual or group contract
holder files a complaint against the limited service health
maintenance organization. As added by P.L.91-2000, SEC.2.
IC 27-13-34
Chapter 34. Limited Service Health Maintenance Organizations
IC 27-13-34-1 "Enrollee" defined
Sec. 1. (a) As used in this chapter, "enrollee" means an individual
who is entitled to limited health services under a contract with an
entity authorized to provide or arrange for limited health services
under this chapter.
(b) The term includes the dependent of an individual described in
subsection (a). As added by P.L.26-1994, SEC.25.
IC 27-13-34-2 "Evidence of coverage" defined
Sec. 2. As used in this chapter, "evidence of coverage" means the
certificate, agreement, or contract issued under section 13 of this
chapter setting forth the coverage to which an enrollee is entitled. As added by P.L.26-1994, SEC.25.
IC 27-13-34-3 "Limited health services" defined
Sec. 3. (a) As used in this chapter, "limited health services" refers
to:
(1) dental care services;
(2) vision care services;
(3) mental health services;
(4) substance abuse services;
(5) pharmaceutical services;
(6) podiatric care services; and
(7) other services that the commissioner determines to be
limited health services.
(b) The term does not include hospital or emergency services,
except as those services are provided incident to a limited health
service. As added by P.L.26-1994, SEC.25.
IC 27-13-34-4 "Limited service health maintenance organization" defined
Sec. 4. (a) As used in this chapter, "limited service health
maintenance organization" means a corporation, partnership, limited
liability company, or other entity that undertakes to provide or
arrange a limited health service on a prepayment basis or other basis.
(b) The term does not include a provider or an entity when
providing or arranging for the provision of limited health services
under a contract with a limited service health maintenance
organization. As added by P.L.26-1994, SEC.25.
IC 27-13-34-5 "Provider" defined
Sec. 5. As used in this chapter, "provider" means a physician, a
dentist, an optometrist, a health facility, or other person or institution
that is licensed or otherwise authorized to deliver or furnish limited
health service. As added by P.L.26-1994, SEC.25.
IC 27-13-34-6 "Subscriber" defined
Sec. 6. As used in this chapter, "subscriber" means a person
whose employment status or other status, except for family
dependency, is the basis for eligibility for limited health services
under a contract with an entity authorized to provide or arrange for
limited health services under this chapter. As added by P.L.26-1994, SEC.25.
IC 27-13-34-7 Certificate of authority required; foreign entities
Sec. 7. (a) After December 31, 1994, a person, corporation,
partnership, limited liability company, or other entity may not
operate a limited service health maintenance organization in Indiana
without obtaining and maintaining a certificate of authority from the
commissioner under this chapter.
(b) A for-profit or nonprofit corporation organized under the laws
of another state, other than a foreign corporation defined under
IC 27-1-2-3, may obtain a certificate of authority to operate a limited
service health maintenance organization in Indiana if the foreign
corporation is authorized to do business in Indiana under IC 23-1-49
or IC 23-17-26 and complies with this chapter.
(c) A foreign corporation (as defined in IC 27-1-2-3) may obtain
a certificate of authority to operate a limited service health
maintenance organization in Indiana if the foreign corporation
complies with this chapter.
(d) A foreign or alien limited service health maintenance
organization granted a certificate of authority under this chapter has
the same but not greater rights and privileges than a domestic limited
service health maintenance organization. As added by P.L.26-1994, SEC.25. Amended by P.L.203-2001,
SEC.32.
IC 27-13-34-8 Application for certificate of authority; requirements
Sec. 8. (a) An application for a certificate of authority to operate
a limited service health maintenance organization must be filed with
the commissioner on a form prescribed by the commissioner. An
application must be verified by an officer or authorized
representative of the applicant and must set forth, or be accompanied
by, the following:
(1) A copy of the applicant's basic organizational document,
such as the articles of incorporation, articles of association,
partnership agreement, trust agreement, articles of organization,
or other applicable documents, and all amendments to those
documents.
(2) A copy of all bylaws, rules and regulations, or similar
documents, if any, regulating the conduct of the internal affairs
of the applicant.
(3) A list of the names, addresses, official positions, and
biographical information of the individuals who are to be
responsible for conducting the affairs and daily operations of
the applicant, including the following:
(A) All members of the board of directors, board of trustees,
executive committee, or other governing board or
committee.
(B) The principal officers.
(C) Any person or entity owning or having the right to
acquire at least ten percent (10%) of the voting securities of
the applicant.
(D) In the case of a partnership or an association, the
partners or members of the partnership or association.
(E) In the case of a limited liability company, the managers
or members of the limited liability company.
(4) A statement generally describing the applicant, the facilities
and personnel of the applicant, and the limited health service or
services that the applicant will offer.
(5) A copy of the form of any contract that has been made or is
to be made between the applicant and any providers regarding
the provision of limited health services to enrollees.
(6) A copy of the form of any contract that has been made or is
to be made between the applicant and any person referred to in
subdivision (3).
(7) A copy of the form of any contract that has been made or is
to be made between the applicant and any person, corporation,
partnership, or other entity for the performance of any functions
on behalf of the applicant, including the following:
(A) Marketing.
(B) Administration.
(C) Enrollment.
(D) Investment management.
(E) Subcontracting for the provision of limited health
services to enrollees.
(8) A copy of the form of any contract that is to be issued to
employers, unions, trustees, or other organizations or
individuals, and a copy of any form of evidence of coverage to
be issued to subscribers.
(9) Subject to subsection (b), a copy of the most recent financial
statements of the applicant, audited by an independent certified
public accountant.
(10) A copy of the financial plan of the applicant, including:
(A) a projection of anticipated operating results for at least
three (3) years; and
(B) a statement of the sources of working capital and any
other sources of funding and provisions for contingencies.
(11) A description of the proposed method of marketing.
(12) A statement acknowledging that all lawful process in any
legal action or proceeding against the applicant on a cause of
action arising in Indiana is valid if served in accordance with
the Indiana Rules of Trial Procedure.
(13) A description of the complaint procedures to be established
and maintained under IC 27-13-10.
(14) A description of the quality assessment and utilization
review procedures to be used by the applicant.
(15) A description of how the applicant will comply with
sections 16 and 17 of this chapter.
(16) The fee for the issuance of a certificate of authority
required by section 23 of this chapter.
(17) A written waiver of the applicant's rights under federal
bankruptcy laws.
(18) Other information that the commissioner reasonably
requires to make the determinations required by this chapter.
(19) If the applicant is not domiciled in Indiana, an executed
power of attorney appointing the commissioner, the
commissioner's successors in office, and authorized deputies of
the commissioner as the true and lawful attorney of the
applicant in and for Indiana upon whom all lawful process in
any legal action or proceeding against the limited service health
maintenance organization on a cause of action arising in Indiana
may be served.
(b) If the financial affairs of the parent company of the applicant
are audited by independent certified public accountants but those of
the applicant are not, an applicant may satisfy the requirement set
forth in subsection (a)(9) by including with the application the most
recent audited financial statement of the applicant's parent company,
certified by an independent certified public accountant, attached to
which shall be consolidating financial statements of the applicant,
unless the commissioner determines that additional or more recent
financial information is required for the proper administration of this
chapter. As added by P.L.26-1994, SEC.25.
IC 27-13-34-9 Issuance of certificate of authority; application deficiencies; denial
of application
Sec. 9. (a) After receiving an application filed under section 8 of
this chapter, the commissioner shall review the application and notify
the applicant of any deficiencies in the application.
(b) The commissioner shall issue a certificate of authority to an
applicant if the following conditions are met:
(1) The requirements of section 8 of this chapter have been
fulfilled.
(2) The individuals responsible for conducting the affairs of the
applicant are competent, trustworthy, possess good reputations,
and have had appropriate experience, training, or education.
(3) The applicant is financially responsible and may reasonably
be expected to meet its obligations to enrollees and to
prospective enrollees. In making this determination, the
commissioner may consider:
(A) the financial soundness of the arrangements of the
applicant for limited health services;
(B) the adequacy of the applicant's working capital, other
sources of funding, and provisions for contingencies;
(C) any agreement for paying the cost of the limited health
services or for alternative coverage in the event of
insolvency of the limited service health maintenance
organization; and
(D) the manner in which the requirements of sections 16 and
17 of this chapter have been fulfilled.
(4) The agreements with providers for the provision of limited
health services contain the provisions required by section 15 of
this chapter.
(5) Any deficiencies identified by the commissioner have been
corrected.
(c) If an application for a certificate of authority is denied, the
commissioner shall notify the applicant and shall specify in the
notice the reasons for the denial of the application. Within thirty (30)
days after receiving the notice, the applicant may request a hearing
before the commissioner under IC 4-21.5. As added by P.L.26-1994, SEC.25.
IC 27-13-34-10 Powers of limited service health maintenance organization
Sec. 10. (a) Subject to subsection (b), the powers of a limited
service health maintenance organization include the following:
(1) The purchase, lease, construction, renovation, operation, or
maintenance of:
(A) medical facilities that will provide limited health
services;
(B) equipment for medical facilities providing limited health
services; and
(C) other property reasonably required for the principal
office of the limited service health maintenance organization
or for purposes necessary in the transaction of the business
of the organization.
(2) Engaging in transactions between affiliated entities,
including loans and the transfer of responsibility under any or
all contracts:
(A) between affiliates; or
(B) between the limited service health maintenance
organization and the parent organization of the limited
service health maintenance organization.
(3) The furnishing of limited health services through the
following:
(A) Providers.
(B) Provider associations.
(C) Agents for providers who are under contract with or are
employed by the limited service health maintenance
organization. The contracts with providers, provider
associations, or agents for providers may include fee for
service, cost plus, capitation, or other payment or
risk-sharing agreements.
(4) Contracting with any person for the performance on behalf
of the limited service health maintenance organization of
certain functions, including:
(A) marketing;
(B) enrollment; and
(C) administration.
(5) Contracting with:
(A) an insurance company licensed in Indiana; or
(B) an authorized reinsurer for the provision of insurance,
indemnity, or reimbursement against the cost of health care
services provided by the limited service health maintenance
organization.
(6) The offering of point-of-service products for the limited
health services for which the limited service health maintenance
organization is licensed so long as the limited service health
maintenance organization complies with the reinsurance or ratio
requirements of IC 27-13-13-8.
(7) The joint marketing of products with:
(A) an insurance company that is licensed in Indiana; or
(B) a health maintenance organization that is authorized to
conduct business in Indiana;
if the company that is offering each product is clearly identified.
(8) Providing limited health services at the expense of a
self-funded plan.
(b) Nothing in this section qualifies an asset of a prepaid limited
health service organization as an admitted asset. As added by P.L.26-1994, SEC.25.
IC 27-13-34-11 Modification of documents; filing; disapproval
Sec. 11. (a) Before making any material modification of any
matter or document furnished under section 8 of this chapter, a
limited service health maintenance organization shall file with the
commissioner:
(1) a notice of the modification; and
(2) supporting documents that are necessary to fully explain the
modification.
(b) If a limited service health maintenance organization desires to
add one (1) or more limited health services, it must:
(1) file a notice with the commissioner;
(2) submit the information required by section 8 of this chapter
concerning each limited health service to be added, if that
information is different from the information filed with the
application of the limited service health maintenance
organization; and
(3) demonstrate compliance with sections 16, 17, 18, and 23 of
this chapter with respect to each limited health service to be
added by the organization.
(c) If the commissioner does not disapprove a filing under
subsection (a) or (b) within thirty (30) days after the commissioner
receives the filing, or within any period of extension granted by the
commissioner, the filing shall be deemed approved.
(d) If a filing under subsection (a) or (b) is disapproved, the
commissioner shall:
(1) notify the limited service health maintenance organization
of the disapproval of the filing in writing deposited in the
United States mail addressed to the limited service health
maintenance organization; and
(2) specify the reasons for disapproval of the filing in the
notice.
(e) Within thirty (30) days after it receives a notice of disapproval
under subsection (d), the limited service health maintenance
organization may request a hearing before the commissioner under
IC 4-21.5 concerning the disapproval of the filing. If, not more than
thirty (30) days after receiving the notice from the commissioner, the
limited service health maintenance organization requests a hearing,
the commissioner shall hold a hearing upon not less than ten (10)
days notice to the limited service health maintenance organization. As added by P.L.26-1994, SEC.25.
IC 27-13-34-12 Applicable statutes
Sec. 12. A limited service health maintenance organization
operated under this chapter is subject to the following:
(1) IC 27-1-36 concerning risk based capital, unless exempted
by the commissioner under IC 27-1-36-1.
(2) IC 27-13-8, except for IC 27-13-8-2(a)(6) concerning
reports.
(3) IC 27-13-9-3 concerning termination of providers.
(4) IC 27-13-10-1 through IC 27-13-10-3 concerning grievance
procedures.
(5) IC 27-13-11 concerning investments.
(6) IC 27-13-15-1(a)(2) through IC 27-13-15-1(a)(3) concerning
gag clauses in contracts.
(7) IC 27-13-21 concerning producers.
(8) IC 27-13-29 concerning statutory construction and
relationship to other laws.
(9) IC 27-13-30 concerning public records.
(10) IC 27-13-31 concerning confidentiality of medical
information and limitation of liability.
(11) IC 27-13-36-5 and IC 27-13-36-6 concerning referrals to
out of network providers and continuation of care.
(12) IC 27-13-40 concerning comparison sheets of services
provided by the limited service health maintenance
organization. As added by P.L.26-1994, SEC.25. Amended by P.L.191-1997,
SEC.14; P.L.69-1998, SEC.12; P.L.133-1999, SEC.8; P.L.51-2002,
SEC.12.
IC 27-13-34-13 Evidence of coverage; required information
Sec. 13. (a) Every subscriber of a limited service health
maintenance organization shall be issued an evidence of coverage in
electronic or paper form, which must contain a clear and complete
statement of the following:
(1) The limited health services to which each enrollee is
entitled.
(2) Any limitation of the services, kinds of services, or benefits
to be provided.
(3) Any exclusions, including any copayment or other charges.
(4) Where and in what manner information is available as to
where and how services may be obtained.
(5) The method for resolving complaints.
(b) Any amendment to the evidence of coverage may be provided
to the subscriber in a separate document in electronic or paper form.
(c) A limited service health maintenance organization shall issue
the evidence of coverage described in subsection (a) and an
amendment described in subsection (b) in paper form upon the
request of the subscriber.
(d) A limited service health maintenance organization shall
include in the limited service health maintenance organization's
enrollment materials information concerning the manner in which a
subscriber may:
(1) obtain an evidence of coverage; and
(2) request the evidence of coverage in paper form. As added by P.L.26-1994, SEC.25. Amended by P.L.125-2005,
SEC.8.
IC 27-13-34-14 Examinations by commissioner
Sec. 14. (a) The commissioner may examine a limited service
health maintenance organization as often as is reasonably necessary
to protect the interests of Indiana citizens. However, an examination
of a limited service health maintenance organization domiciled in
Indiana must be conducted at least one (1) time every three (3) years.
(b) A limited service health maintenance organization:
(1) shall make its relevant books and records, and the books and
records in its custody and control, available for examination
under this section; and
(2) in every way cooperate with the commissioner to facilitate
the examination.
(c) The expenses of an examination under this section shall be
paid by the organization being examined.
(d) Instead of conducting an examination of a limited service
health maintenance organization that is not domiciled in Indiana, the
commissioner may accept the report of an examination made by the
chief administrative officer who regulates insurance in another state,
if the other state is accredited by the National Association of
Insurance Commissioners. As added by P.L.26-1994, SEC.25.
IC 27-13-34-15 Required contract terms and conditions; exemptions
Sec. 15. All contracts with providers or with entities
subcontracting for the provision of limited health services to
enrollees on a prepayment basis or other basis must contain, or shall
be construed to contain, the following terms and conditions:
(1) If the limited service health maintenance organization fails
to pay for limited health services for any reason whatsoever,
including insolvency or breach of this contract, the enrollees
shall not be liable to the provider for any sums owed to the
provider under this contract.
(2) No provider or agent, trustee, representative, or assignee of
a provider may maintain an action at law or attempt to collect
from the enrollee sums that the limited service health
maintenance organization owes to the provider.
(3) These provisions do not prohibit the collection of:
(A) uncovered charges consented to by enrollees; or
(B) copayments;
from enrollees.
(4) The contract may not provide for a financial or other penalty
to a primary care provider for making a referral permitted under
IC 27-13-36-5(a), but may provide for reasonable cost sharing
between the primary care provider and the limited service
health maintenance organization for the additional costs
incurred as a result of services provided by an out of network
provider.
(5) These provisions survive the termination of this contract,
regardless of the reason for the termination.
(6) For not more than ninety (90) days after the termination of
this contract, the provider must complete procedures in progress
on an enrollee receiving treatment for a specific condition, at
the same schedule of copayment or other applicable charge that
is in effect on the effective date of termination of the contract.
(7) An amendment to the provisions of this contract set forth in
subdivisions (1) through (6) must be:
(A) submitted to; and
(B) approved by;
the commissioner before it becomes effective. As added by P.L.26-1994, SEC.25. Amended by P.L.69-1998,
SEC.13. IC 27-13-34-16 "Net worth" and "uncovered expense" defined; computation of net
worth; minimum net worth
Sec. 16. (a) As used in this section, "net worth" means the excess
of total assets over total liabilities, excluding liabilities that have
been subordinated in a manner acceptable to the commissioner.
(b) For the purposes of computing net worth, the total assets must
be reduced by the value assigned to the following intangible assets:
(1) Goodwill.
(2) Going concern value.
(3) Organizational expense.
(4) Start-up costs.
(5) Long term prepayments of deferred charges.
(6) Nonreturnable deposits.
(7) Obligations of officers, directors, owners, or affiliates,
except short term obligations of affiliates for goods or services
that:
(A) arise in the normal course of business;
(B) are payable on the same terms as equivalent transactions
with nonaffiliates; and
(C) are not past due.
(c) As used in this section, "uncovered expense" means the cost
of health care services:
(1) that are the obligation of a limited service health
maintenance organization;
(2) for which an enrollee may be liable in the event of the
insolvency of the organization; and
(3) for which alternative arrangements acceptable to the
commissioner have not been made to cover the costs.
(d) For purposes of the definition of "uncovered expense" set
forth in subsection (c), costs incurred by a provider who has agreed
in writing not to bill enrollees, except for permissible supplemental
charges, shall be considered a covered expense.
(e) Each limited service health maintenance organization must, at
all times, have and maintain net worth equal to the greater of:
(1) fifty thousand dollars ($50,000); or
(2) two and one-half percent (2.5%) of the annual gross
subscription income of the organization, up to a maximum of
two hundred fifty thousand dollars ($250,000).
(f) A limited service health maintenance organization shall
maintain as a claim or loss reserve, in cash or obligations of the
United States government, assets sufficient to discharge all liabilities
on all uncovered expenses arising under policies issued.
(g) The commissioner may adopt rules under IC 4-22-2 to further
define whether and to what extent the assets of a limited service
health maintenance organization may be considered to be admitted
assets for the purposes of complying with the requirements of this
chapter. As added by P.L.26-1994, SEC.25. IC 27-13-34-17 Required deposit
Sec. 17. (a) Each limited service health maintenance organization
shall deposit in a joint-name account with:
(1) the commissioner; or
(2) any bank or bank and trust company or other financial
institution acceptable to the commissioner through which a
custodial or controlled account is used;
cash, securities acceptable to the commissioner, or any combination
of these, in an amount equal to fifty thousand dollars ($50,000).
(b) For the purposes of section 16 of this chapter:
(1) a deposit made by an organization under this section shall be
treated as an admitted asset of the organization in the
determination of net worth; and
(2) all income from deposits of an organization under this
section shall be an asset of the organization.
(c) An organization may withdraw:
(1) a deposit made under this section; or
(2) any part of the deposit;
after making a substitute deposit of equal amount and value.
(d) Any obligations of the United States government deposited
with the commissioner under this section must be approved by the
commissioner before being substituted under subsection (c).
(e) The deposit made by a limited service health maintenance
organization under this section shall be used to protect the interest of
the enrollees of the organization and to assure continuation of limited
health care services to enrollees of a limited service health
maintenance organization that is in rehabilitation or conservation.
(f) If a limited service health maintenance organization is placed
in rehabilitation or liquidation, the deposit made by the organization
under this section shall be an asset subject to IC 27-9.
(g) The commissioner is not required to but may reduce or
eliminate the deposit requirement of this section for a limited service
health maintenance organization if the organization:
(1) has made an acceptable deposit with the state or jurisdiction
in which the organization is domiciled for the protection of all
enrollees, wherever located; and
(2) delivers to the commissioner a certificate to that effect,
authenticated by the appropriate state official holding the
deposit. As added by P.L.26-1994, SEC.25.
IC 27-13-34-18 Fidelity bonds; deposit in place of bond
Sec. 18. (a) Except as provided in subsection (c), a limited service
health maintenance organization shall maintain in force a fidelity
bond in its own name on its officers and employees:
(1) in an amount not less than fifty thousand dollars ($50,000);
or
(2) in any other amount prescribed by the commissioner.
(b) The fidelity bond required by this section must be issued by an
insurance company not affiliated in any way with the limited service
health maintenance organization, that is licensed to do business in
Indiana. However, if a fidelity bond is not available from an
insurance company that holds a certificate of authority in Indiana, a
limited service health maintenance organization may satisfy the
requirement of this section by maintaining a fidelity bond procured
by a surplus lines insurance producer not affiliated in any way with
the limited service health maintenance organization who holds a
license issued under IC 27-1-15.8.
(c) Instead of maintaining a fidelity bond under subsection (a), a
limited service health maintenance organization may deposit with the
commissioner:
(1) cash;
(2) certificates of deposit;
(3) United States government obligations acceptable to the
commissioner;
(4) any other securities acceptable to the commissioner of the
types referred to in IC 27-13-11-1; or
(5) a combination of the items described in subdivisions (1)
through (4).
A deposit made under this subsection is in addition to any other
required deposit, and must also be maintained in joint custody with
the commissioner in the amount and subject to the same conditions
required for a fidelity bond under this section. As added by P.L.26-1994, SEC.25. Amended by P.L.132-2001,
SEC.19; P.L.178-2003, SEC.87.
IC 27-13-34-19 Annual reports; additional reports
Sec. 19. (a) On or before March 1 of each year, a limited service
health maintenance organization shall file with the commissioner a
report that covers the preceding calendar year. The report must be:
(1) made on forms prescribed by the commissioner; and
(2) verified by at least two (2) principal officers of the limited
service health maintenance organization.
(b) In addition to the report required by subsection (a), a limited
service health maintenance organization shall file with the
commissioner on or before June 1 of each year an audited financial
statement of the limited service health maintenance organization for
the preceding calendar year.
(c) The commissioner may require any additional reports
necessary to enable the commissioner to carry out the duties of the
commissioner under this chapter. As added by P.L.26-1994, SEC.25.
IC 27-13-34-20 Suspension or revocation of certificate of authority
Sec. 20. (a) The commissioner may suspend or revoke the
certificate of authority issued to a limited service health maintenance
organization under this chapter or deny an application submitted
under this chapter upon determining that any of the following
conditions exist:
(1) The limited service health maintenance organization is
operating:
(A) significantly in contravention of the basic organizational
document of the organization; or
(B) in a manner contrary to that described in and reasonably
inferred from any other information submitted under section
8 of this chapter;
unless amendments to the organization's submissions have been
filed and authorized under section 11 of this chapter.
(2) The limited service health maintenance organization issues
an evidence of coverage that does not comply with the
requirements of section 13 of this chapter.
(3) The limited service health maintenance organization is
unable to fulfill its obligations to furnish limited health
services.
(4) The limited service health maintenance organization is not
financially responsible and may reasonably be expected to be
unable to meet its obligations to enrollees or prospective
enrollees.
(5) The net worth of the limited service health maintenance
organization is less than that required by section 16 of this
chapter, or the limited service health maintenance organization
has failed to correct any deficiency in its net worth as required
by the commissioner.
(6) The limited service health maintenance organization has
failed to implement in a reasonable manner the grievance
system required by IC 27-13-10.
(7) The continued operation of the limited service health
maintenance organization would be hazardous to the enrollees
of the organization.
(8) The limited service health maintenance organization has
otherwise failed to comply with this chapter.
(b) The commissioner may suspend or revoke a certificate of
authority or deny an application for a certificate of authority by
written order sent to the limited service health maintenance
organization by certified mail or registered mail. The written order
shall state the grounds for the suspension, revocation, or denial. A
limited service health maintenance organization may request in
writing a hearing within thirty (30) days after mailing of the order.
If the limited service health maintenance organization requests a
hearing within the time specified, the commissioner shall hold a
hearing, which may not be less than twenty (20) days or more than
sixty (60) days after the date of the notice for a hearing on the matter
under IC 4-21.5.
(c) Immediately after the certificate of authority of a limited
service health maintenance organization is revoked, the organization
shall proceed to wind up its affairs. An organization whose
certificate is revoked:
(1) shall not conduct further business except as may be essential
to the orderly conclusion of the affairs of the organization; and
(2) shall not engage in further advertising or solicitation.
However, the commissioner may, by written order, permit the further
operation of the organization as the commissioner may find to be in
the best interest of enrollees, to the end that enrollees will be
afforded the greatest practical opportunity to obtain continuing
limited health services. As added by P.L.26-1994, SEC.25.
IC 27-13-34-21 Chapter violations; fines and penalties
Sec. 21. (a) In place of any other penalty specified in this chapter,
or when no penalty is specifically provided, whenever any limited
service health maintenance organization or other person, corporation,
partnership, limited liability company, or entity subject to this
chapter has been found to have violated any provision of this chapter,
the commissioner may:
(1) issue and cause to be served upon the organization, person,
or entity charged with the violation a copy of the findings and
an order requiring the organization, person, or entity to cease
and desist from engaging in the act or practice that constitutes
the violation; and
(2) impose a monetary penalty of not more than two thousand
five hundred dollars ($2,500) for each violation, but not to
exceed an aggregate penalty of twenty-five thousand dollars
($25,000).
(b) A limited service health maintenance organization may appeal
any action taken by the commissioner under this section within thirty
(30) days after receiving notice of the action by requesting a hearing
before the commissioner under IC 4-21.5. As added by P.L.26-1994, SEC.25.
IC 27-13-34-22 Supervision, rehabilitation, or liquidation; remedies and measures
Sec. 22. (a) Any supervision, rehabilitation, or liquidation of a
limited service health maintenance organization shall be considered
to be the supervision, rehabilitation, or liquidation of an insurance
company and shall be conducted under IC 27-9.
(b) A limited service health maintenance organization is not
subject to IC 27-6-8 or IC 27-8-8.
(c) The remedies and measures available to the commissioner
under this chapter are in addition to and not in the place of the
remedies and measures available to the commissioner under IC 27-9. As added by P.L.26-1994, SEC.25.
IC 27-13-34-23 Fees
Sec. 23. (a) A limited service health maintenance organization
subject to this chapter shall pay to the commissioner for deposit into
the department of insurance fund established by IC 27-1-3-28 the
following fees:
(1) For filing an application for a certificate of authority or an
amendment to an application, three hundred fifty dollars ($350).
(2) For filing each annual report, fifty dollars ($50).
(b) In addition to the fees required by subsection (a), a limited
service health maintenance organization subject to this chapter must
pay the fees required by IC 27-1-3-15. As added by P.L.26-1994, SEC.25. Amended by P.L.173-2007,
SEC.45; P.L.234-2007, SEC.199.
IC 27-13-34-24 Dental care services and director; review of adverse decisions;
complaints
Sec. 24. (a) A limited service health maintenance organization
that provides dental care services shall appoint a dental director who
has an unlimited license to practice dentistry under IC 25-14 or an
equivalent license issued by another state.
(b) The dental director appointed under subsection (a) is
responsible for oversight of treatment policies, protocols, quality
assurance activities, credentialing of participating providers, and
utilization management decisions of the limited service health
maintenance organization.
(c) A limited service health maintenance organization that
provides dental care services shall contract with or employ at least
one (1) individual who holds an unlimited license to practice
dentistry under IC 25-14 or an equivalent license issued by another
state to do the following:
(1) Develop, in consultation with a group of appropriate
providers, the limited service health maintenance organization's
treatment policies, protocols, and quality assurance activities.
(2) Respond when a treating provider requests in writing that a
dentist reconsider an adverse utilization review decision.
(d) A limited service health maintenance organization that
provides dental care services that receives a written request for
reconsideration of an adverse utilization review decision from a
treating provider shall:
(1) review the decision as expeditiously as possible; and
(2) provide a response to the treating provider not more than ten
(10) business days after receiving the request.
(e) A limited service health maintenance organization that
provides dental care services shall provide participating providers
with an opportunity to comment on the following:
(1) Treatment policies.
(2) Protocols.
(3) Quality assurance activities.
(4) Credentialing policies and procedures.
(5) Utilization management policies and procedures. As added by P.L.91-2000, SEC.1. IC 27-13-34-26 Complaints; records
Sec. 26. (a) The department shall maintain records concerning
complaints filed against a limited service health maintenance
organization that provides dental care services.
(b) The department shall classify complaints described in
subsection (a) in categories according to the National Association of
Insurance Commissioners standardized complaint report procedures.
(c) The department shall classify the disposition of complaints in
each category by:
(1) number of complaints for which corrective action is
considered necessary by the department; and
(2) number of complaints classified by National Association of
Insurance Commissioners disposition codes.
(d) The department shall make information specified in this
section available to the public in a form that does not identify any
specific individual.
(e) A limited service health maintenance organization that
provides dental care services may not take any retaliatory action,
including cancellation or refusal to renew a participating provider
contract, individual contract, or group contract, solely because a
participating provider, enrollee, or individual or group contract
holder files a complaint against the limited service health
maintenance organization. As added by P.L.91-2000, SEC.2.
IC 27-13-34
Chapter 34. Limited Service Health Maintenance Organizations
IC 27-13-34-1 "Enrollee" defined
Sec. 1. (a) As used in this chapter, "enrollee" means an individual
who is entitled to limited health services under a contract with an
entity authorized to provide or arrange for limited health services
under this chapter.
(b) The term includes the dependent of an individual described in
subsection (a). As added by P.L.26-1994, SEC.25.
IC 27-13-34-2 "Evidence of coverage" defined
Sec. 2. As used in this chapter, "evidence of coverage" means the
certificate, agreement, or contract issued under section 13 of this
chapter setting forth the coverage to which an enrollee is entitled. As added by P.L.26-1994, SEC.25.
IC 27-13-34-3 "Limited health services" defined
Sec. 3. (a) As used in this chapter, "limited health services" refers
to:
(1) dental care services;
(2) vision care services;
(3) mental health services;
(4) substance abuse services;
(5) pharmaceutical services;
(6) podiatric care services; and
(7) other services that the commissioner determines to be
limited health services.
(b) The term does not include hospital or emergency services,
except as those services are provided incident to a limited health
service. As added by P.L.26-1994, SEC.25.
IC 27-13-34-4 "Limited service health maintenance organization" defined
Sec. 4. (a) As used in this chapter, "limited service health
maintenance organization" means a corporation, partnership, limited
liability company, or other entity that undertakes to provide or
arrange a limited health service on a prepayment basis or other basis.
(b) The term does not include a provider or an entity when
providing or arranging for the provision of limited health services
under a contract with a limited service health maintenance
organization. As added by P.L.26-1994, SEC.25.
IC 27-13-34-5 "Provider" defined
Sec. 5. As used in this chapter, "provider" means a physician, a
dentist, an optometrist, a health facility, or other person or institution
that is licensed or otherwise authorized to deliver or furnish limited
health service. As added by P.L.26-1994, SEC.25.
IC 27-13-34-6 "Subscriber" defined
Sec. 6. As used in this chapter, "subscriber" means a person
whose employment status or other status, except for family
dependency, is the basis for eligibility for limited health services
under a contract with an entity authorized to provide or arrange for
limited health services under this chapter. As added by P.L.26-1994, SEC.25.
IC 27-13-34-7 Certificate of authority required; foreign entities
Sec. 7. (a) After December 31, 1994, a person, corporation,
partnership, limited liability company, or other entity may not
operate a limited service health maintenance organization in Indiana
without obtaining and maintaining a certificate of authority from the
commissioner under this chapter.
(b) A for-profit or nonprofit corporation organized under the laws
of another state, other than a foreign corporation defined under
IC 27-1-2-3, may obtain a certificate of authority to operate a limited
service health maintenance organization in Indiana if the foreign
corporation is authorized to do business in Indiana under IC 23-1-49
or IC 23-17-26 and complies with this chapter.
(c) A foreign corporation (as defined in IC 27-1-2-3) may obtain
a certificate of authority to operate a limited service health
maintenance organization in Indiana if the foreign corporation
complies with this chapter.
(d) A foreign or alien limited service health maintenance
organization granted a certificate of authority under this chapter has
the same but not greater rights and privileges than a domestic limited
service health maintenance organization. As added by P.L.26-1994, SEC.25. Amended by P.L.203-2001,
SEC.32.
IC 27-13-34-8 Application for certificate of authority; requirements
Sec. 8. (a) An application for a certificate of authority to operate
a limited service health maintenance organization must be filed with
the commissioner on a form prescribed by the commissioner. An
application must be verified by an officer or authorized
representative of the applicant and must set forth, or be accompanied
by, the following:
(1) A copy of the applicant's basic organizational document,
such as the articles of incorporation, articles of association,
partnership agreement, trust agreement, articles of organization,
or other applicable documents, and all amendments to those
documents.
(2) A copy of all bylaws, rules and regulations, or similar
documents, if any, regulating the conduct of the internal affairs
of the applicant.
(3) A list of the names, addresses, official positions, and
biographical information of the individuals who are to be
responsible for conducting the affairs and daily operations of
the applicant, including the following:
(A) All members of the board of directors, board of trustees,
executive committee, or other governing board or
committee.
(B) The principal officers.
(C) Any person or entity owning or having the right to
acquire at least ten percent (10%) of the voting securities of
the applicant.
(D) In the case of a partnership or an association, the
partners or members of the partnership or association.
(E) In the case of a limited liability company, the managers
or members of the limited liability company.
(4) A statement generally describing the applicant, the facilities
and personnel of the applicant, and the limited health service or
services that the applicant will offer.
(5) A copy of the form of any contract that has been made or is
to be made between the applicant and any providers regarding
the provision of limited health services to enrollees.
(6) A copy of the form of any contract that has been made or is
to be made between the applicant and any person referred to in
subdivision (3).
(7) A copy of the form of any contract that has been made or is
to be made between the applicant and any person, corporation,
partnership, or other entity for the performance of any functions
on behalf of the applicant, including the following:
(A) Marketing.
(B) Administration.
(C) Enrollment.
(D) Investment management.
(E) Subcontracting for the provision of limited health
services to enrollees.
(8) A copy of the form of any contract that is to be issued to
employers, unions, trustees, or other organizations or
individuals, and a copy of any form of evidence of coverage to
be issued to subscribers.
(9) Subject to subsection (b), a copy of the most recent financial
statements of the applicant, audited by an independent certified
public accountant.
(10) A copy of the financial plan of the applicant, including:
(A) a projection of anticipated operating results for at least
three (3) years; and
(B) a statement of the sources of working capital and any
other sources of funding and provisions for contingencies.
(11) A description of the proposed method of marketing.
(12) A statement acknowledging that all lawful process in any
legal action or proceeding against the applicant on a cause of
action arising in Indiana is valid if served in accordance with
the Indiana Rules of Trial Procedure.
(13) A description of the complaint procedures to be established
and maintained under IC 27-13-10.
(14) A description of the quality assessment and utilization
review procedures to be used by the applicant.
(15) A description of how the applicant will comply with
sections 16 and 17 of this chapter.
(16) The fee for the issuance of a certificate of authority
required by section 23 of this chapter.
(17) A written waiver of the applicant's rights under federal
bankruptcy laws.
(18) Other information that the commissioner reasonably
requires to make the determinations required by this chapter.
(19) If the applicant is not domiciled in Indiana, an executed
power of attorney appointing the commissioner, the
commissioner's successors in office, and authorized deputies of
the commissioner as the true and lawful attorney of the
applicant in and for Indiana upon whom all lawful process in
any legal action or proceeding against the limited service health
maintenance organization on a cause of action arising in Indiana
may be served.
(b) If the financial affairs of the parent company of the applicant
are audited by independent certified public accountants but those of
the applicant are not, an applicant may satisfy the requirement set
forth in subsection (a)(9) by including with the application the most
recent audited financial statement of the applicant's parent company,
certified by an independent certified public accountant, attached to
which shall be consolidating financial statements of the applicant,
unless the commissioner determines that additional or more recent
financial information is required for the proper administration of this
chapter. As added by P.L.26-1994, SEC.25.
IC 27-13-34-9 Issuance of certificate of authority; application deficiencies; denial
of application
Sec. 9. (a) After receiving an application filed under section 8 of
this chapter, the commissioner shall review the application and notify
the applicant of any deficiencies in the application.
(b) The commissioner shall issue a certificate of authority to an
applicant if the following conditions are met:
(1) The requirements of section 8 of this chapter have been
fulfilled.
(2) The individuals responsible for conducting the affairs of the
applicant are competent, trustworthy, possess good reputations,
and have had appropriate experience, training, or education.
(3) The applicant is financially responsible and may reasonably
be expected to meet its obligations to enrollees and to
prospective enrollees. In making this determination, the
commissioner may consider:
(A) the financial soundness of the arrangements of the
applicant for limited health services;
(B) the adequacy of the applicant's working capital, other
sources of funding, and provisions for contingencies;
(C) any agreement for paying the cost of the limited health
services or for alternative coverage in the event of
insolvency of the limited service health maintenance
organization; and
(D) the manner in which the requirements of sections 16 and
17 of this chapter have been fulfilled.
(4) The agreements with providers for the provision of limited
health services contain the provisions required by section 15 of
this chapter.
(5) Any deficiencies identified by the commissioner have been
corrected.
(c) If an application for a certificate of authority is denied, the
commissioner shall notify the applicant and shall specify in the
notice the reasons for the denial of the application. Within thirty (30)
days after receiving the notice, the applicant may request a hearing
before the commissioner under IC 4-21.5. As added by P.L.26-1994, SEC.25.
IC 27-13-34-10 Powers of limited service health maintenance organization
Sec. 10. (a) Subject to subsection (b), the powers of a limited
service health maintenance organization include the following:
(1) The purchase, lease, construction, renovation, operation, or
maintenance of:
(A) medical facilities that will provide limited health
services;
(B) equipment for medical facilities providing limited health
services; and
(C) other property reasonably required for the principal
office of the limited service health maintenance organization
or for purposes necessary in the transaction of the business
of the organization.
(2) Engaging in transactions between affiliated entities,
including loans and the transfer of responsibility under any or
all contracts:
(A) between affiliates; or
(B) between the limited service health maintenance
organization and the parent organization of the limited
service health maintenance organization.
(3) The furnishing of limited health services through the
following:
(A) Providers.
(B) Provider associations.
(C) Agents for providers who are under contract with or are
employed by the limited service health maintenance
organization. The contracts with providers, provider
associations, or agents for providers may include fee for
service, cost plus, capitation, or other payment or
risk-sharing agreements.
(4) Contracting with any person for the performance on behalf
of the limited service health maintenance organization of
certain functions, including:
(A) marketing;
(B) enrollment; and
(C) administration.
(5) Contracting with:
(A) an insurance company licensed in Indiana; or
(B) an authorized reinsurer for the provision of insurance,
indemnity, or reimbursement against the cost of health care
services provided by the limited service health maintenance
organization.
(6) The offering of point-of-service products for the limited
health services for which the limited service health maintenance
organization is licensed so long as the limited service health
maintenance organization complies with the reinsurance or ratio
requirements of IC 27-13-13-8.
(7) The joint marketing of products with:
(A) an insurance company that is licensed in Indiana; or
(B) a health maintenance organization that is authorized to
conduct business in Indiana;
if the company that is offering each product is clearly identified.
(8) Providing limited health services at the expense of a
self-funded plan.
(b) Nothing in this section qualifies an asset of a prepaid limited
health service organization as an admitted asset. As added by P.L.26-1994, SEC.25.
IC 27-13-34-11 Modification of documents; filing; disapproval
Sec. 11. (a) Before making any material modification of any
matter or document furnished under section 8 of this chapter, a
limited service health maintenance organization shall file with the
commissioner:
(1) a notice of the modification; and
(2) supporting documents that are necessary to fully explain the
modification.
(b) If a limited service health maintenance organization desires to
add one (1) or more limited health services, it must:
(1) file a notice with the commissioner;
(2) submit the information required by section 8 of this chapter
concerning each limited health service to be added, if that
information is different from the information filed with the
application of the limited service health maintenance
organization; and
(3) demonstrate compliance with sections 16, 17, 18, and 23 of
this chapter with respect to each limited health service to be
added by the organization.
(c) If the commissioner does not disapprove a filing under
subsection (a) or (b) within thirty (30) days after the commissioner
receives the filing, or within any period of extension granted by the
commissioner, the filing shall be deemed approved.
(d) If a filing under subsection (a) or (b) is disapproved, the
commissioner shall:
(1) notify the limited service health maintenance organization
of the disapproval of the filing in writing deposited in the
United States mail addressed to the limited service health
maintenance organization; and
(2) specify the reasons for disapproval of the filing in the
notice.
(e) Within thirty (30) days after it receives a notice of disapproval
under subsection (d), the limited service health maintenance
organization may request a hearing before the commissioner under
IC 4-21.5 concerning the disapproval of the filing. If, not more than
thirty (30) days after receiving the notice from the commissioner, the
limited service health maintenance organization requests a hearing,
the commissioner shall hold a hearing upon not less than ten (10)
days notice to the limited service health maintenance organization. As added by P.L.26-1994, SEC.25.
IC 27-13-34-12 Applicable statutes
Sec. 12. A limited service health maintenance organization
operated under this chapter is subject to the following:
(1) IC 27-1-36 concerning risk based capital, unless exempted
by the commissioner under IC 27-1-36-1.
(2) IC 27-13-8, except for IC 27-13-8-2(a)(6) concerning
reports.
(3) IC 27-13-9-3 concerning termination of providers.
(4) IC 27-13-10-1 through IC 27-13-10-3 concerning grievance
procedures.
(5) IC 27-13-11 concerning investments.
(6) IC 27-13-15-1(a)(2) through IC 27-13-15-1(a)(3) concerning
gag clauses in contracts.
(7) IC 27-13-21 concerning producers.
(8) IC 27-13-29 concerning statutory construction and
relationship to other laws.
(9) IC 27-13-30 concerning public records.
(10) IC 27-13-31 concerning confidentiality of medical
information and limitation of liability.
(11) IC 27-13-36-5 and IC 27-13-36-6 concerning referrals to
out of network providers and continuation of care.
(12) IC 27-13-40 concerning comparison sheets of services
provided by the limited service health maintenance
organization. As added by P.L.26-1994, SEC.25. Amended by P.L.191-1997,
SEC.14; P.L.69-1998, SEC.12; P.L.133-1999, SEC.8; P.L.51-2002,
SEC.12.
IC 27-13-34-13 Evidence of coverage; required information
Sec. 13. (a) Every subscriber of a limited service health
maintenance organization shall be issued an evidence of coverage in
electronic or paper form, which must contain a clear and complete
statement of the following:
(1) The limited health services to which each enrollee is
entitled.
(2) Any limitation of the services, kinds of services, or benefits
to be provided.
(3) Any exclusions, including any copayment or other charges.
(4) Where and in what manner information is available as to
where and how services may be obtained.
(5) The method for resolving complaints.
(b) Any amendment to the evidence of coverage may be provided
to the subscriber in a separate document in electronic or paper form.
(c) A limited service health maintenance organization shall issue
the evidence of coverage described in subsection (a) and an
amendment described in subsection (b) in paper form upon the
request of the subscriber.
(d) A limited service health maintenance organization shall
include in the limited service health maintenance organization's
enrollment materials information concerning the manner in which a
subscriber may:
(1) obtain an evidence of coverage; and
(2) request the evidence of coverage in paper form. As added by P.L.26-1994, SEC.25. Amended by P.L.125-2005,
SEC.8.
IC 27-13-34-14 Examinations by commissioner
Sec. 14. (a) The commissioner may examine a limited service
health maintenance organization as often as is reasonably necessary
to protect the interests of Indiana citizens. However, an examination
of a limited service health maintenance organization domiciled in
Indiana must be conducted at least one (1) time every three (3) years.
(b) A limited service health maintenance organization:
(1) shall make its relevant books and records, and the books and
records in its custody and control, available for examination
under this section; and
(2) in every way cooperate with the commissioner to facilitate
the examination.
(c) The expenses of an examination under this section shall be
paid by the organization being examined.
(d) Instead of conducting an examination of a limited service
health maintenance organization that is not domiciled in Indiana, the
commissioner may accept the report of an examination made by the
chief administrative officer who regulates insurance in another state,
if the other state is accredited by the National Association of
Insurance Commissioners. As added by P.L.26-1994, SEC.25.
IC 27-13-34-15 Required contract terms and conditions; exemptions
Sec. 15. All contracts with providers or with entities
subcontracting for the provision of limited health services to
enrollees on a prepayment basis or other basis must contain, or shall
be construed to contain, the following terms and conditions:
(1) If the limited service health maintenance organization fails
to pay for limited health services for any reason whatsoever,
including insolvency or breach of this contract, the enrollees
shall not be liable to the provider for any sums owed to the
provider under this contract.
(2) No provider or agent, trustee, representative, or assignee of
a provider may maintain an action at law or attempt to collect
from the enrollee sums that the limited service health
maintenance organization owes to the provider.
(3) These provisions do not prohibit the collection of:
(A) uncovered charges consented to by enrollees; or
(B) copayments;
from enrollees.
(4) The contract may not provide for a financial or other penalty
to a primary care provider for making a referral permitted under
IC 27-13-36-5(a), but may provide for reasonable cost sharing
between the primary care provider and the limited service
health maintenance organization for the additional costs
incurred as a result of services provided by an out of network
provider.
(5) These provisions survive the termination of this contract,
regardless of the reason for the termination.
(6) For not more than ninety (90) days after the termination of
this contract, the provider must complete procedures in progress
on an enrollee receiving treatment for a specific condition, at
the same schedule of copayment or other applicable charge that
is in effect on the effective date of termination of the contract.
(7) An amendment to the provisions of this contract set forth in
subdivisions (1) through (6) must be:
(A) submitted to; and
(B) approved by;
the commissioner before it becomes effective. As added by P.L.26-1994, SEC.25. Amended by P.L.69-1998,
SEC.13. IC 27-13-34-16 "Net worth" and "uncovered expense" defined; computation of net
worth; minimum net worth
Sec. 16. (a) As used in this section, "net worth" means the excess
of total assets over total liabilities, excluding liabilities that have
been subordinated in a manner acceptable to the commissioner.
(b) For the purposes of computing net worth, the total assets must
be reduced by the value assigned to the following intangible assets:
(1) Goodwill.
(2) Going concern value.
(3) Organizational expense.
(4) Start-up costs.
(5) Long term prepayments of deferred charges.
(6) Nonreturnable deposits.
(7) Obligations of officers, directors, owners, or affiliates,
except short term obligations of affiliates for goods or services
that:
(A) arise in the normal course of business;
(B) are payable on the same terms as equivalent transactions
with nonaffiliates; and
(C) are not past due.
(c) As used in this section, "uncovered expense" means the cost
of health care services:
(1) that are the obligation of a limited service health
maintenance organization;
(2) for which an enrollee may be liable in the event of the
insolvency of the organization; and
(3) for which alternative arrangements acceptable to the
commissioner have not been made to cover the costs.
(d) For purposes of the definition of "uncovered expense" set
forth in subsection (c), costs incurred by a provider who has agreed
in writing not to bill enrollees, except for permissible supplemental
charges, shall be considered a covered expense.
(e) Each limited service health maintenance organization must, at
all times, have and maintain net worth equal to the greater of:
(1) fifty thousand dollars ($50,000); or
(2) two and one-half percent (2.5%) of the annual gross
subscription income of the organization, up to a maximum of
two hundred fifty thousand dollars ($250,000).
(f) A limited service health maintenance organization shall
maintain as a claim or loss reserve, in cash or obligations of the
United States government, assets sufficient to discharge all liabilities
on all uncovered expenses arising under policies issued.
(g) The commissioner may adopt rules under IC 4-22-2 to further
define whether and to what extent the assets of a limited service
health maintenance organization may be considered to be admitted
assets for the purposes of complying with the requirements of this
chapter. As added by P.L.26-1994, SEC.25. IC 27-13-34-17 Required deposit
Sec. 17. (a) Each limited service health maintenance organization
shall deposit in a joint-name account with:
(1) the commissioner; or
(2) any bank or bank and trust company or other financial
institution acceptable to the commissioner through which a
custodial or controlled account is used;
cash, securities acceptable to the commissioner, or any combination
of these, in an amount equal to fifty thousand dollars ($50,000).
(b) For the purposes of section 16 of this chapter:
(1) a deposit made by an organization under this section shall be
treated as an admitted asset of the organization in the
determination of net worth; and
(2) all income from deposits of an organization under this
section shall be an asset of the organization.
(c) An organization may withdraw:
(1) a deposit made under this section; or
(2) any part of the deposit;
after making a substitute deposit of equal amount and value.
(d) Any obligations of the United States government deposited
with the commissioner under this section must be approved by the
commissioner before being substituted under subsection (c).
(e) The deposit made by a limited service health maintenance
organization under this section shall be used to protect the interest of
the enrollees of the organization and to assure continuation of limited
health care services to enrollees of a limited service health
maintenance organization that is in rehabilitation or conservation.
(f) If a limited service health maintenance organization is placed
in rehabilitation or liquidation, the deposit made by the organization
under this section shall be an asset subject to IC 27-9.
(g) The commissioner is not required to but may reduce or
eliminate the deposit requirement of this section for a limited service
health maintenance organization if the organization:
(1) has made an acceptable deposit with the state or jurisdiction
in which the organization is domiciled for the protection of all
enrollees, wherever located; and
(2) delivers to the commissioner a certificate to that effect,
authenticated by the appropriate state official holding the
deposit. As added by P.L.26-1994, SEC.25.
IC 27-13-34-18 Fidelity bonds; deposit in place of bond
Sec. 18. (a) Except as provided in subsection (c), a limited service
health maintenance organization shall maintain in force a fidelity
bond in its own name on its officers and employees:
(1) in an amount not less than fifty thousand dollars ($50,000);
or
(2) in any other amount prescribed by the commissioner.
(b) The fidelity bond required by this section must be issued by an
insurance company not affiliated in any way with the limited service
health maintenance organization, that is licensed to do business in
Indiana. However, if a fidelity bond is not available from an
insurance company that holds a certificate of authority in Indiana, a
limited service health maintenance organization may satisfy the
requirement of this section by maintaining a fidelity bond procured
by a surplus lines insurance producer not affiliated in any way with
the limited service health maintenance organization who holds a
license issued under IC 27-1-15.8.
(c) Instead of maintaining a fidelity bond under subsection (a), a
limited service health maintenance organization may deposit with the
commissioner:
(1) cash;
(2) certificates of deposit;
(3) United States government obligations acceptable to the
commissioner;
(4) any other securities acceptable to the commissioner of the
types referred to in IC 27-13-11-1; or
(5) a combination of the items described in subdivisions (1)
through (4).
A deposit made under this subsection is in addition to any other
required deposit, and must also be maintained in joint custody with
the commissioner in the amount and subject to the same conditions
required for a fidelity bond under this section. As added by P.L.26-1994, SEC.25. Amended by P.L.132-2001,
SEC.19; P.L.178-2003, SEC.87.
IC 27-13-34-19 Annual reports; additional reports
Sec. 19. (a) On or before March 1 of each year, a limited service
health maintenance organization shall file with the commissioner a
report that covers the preceding calendar year. The report must be:
(1) made on forms prescribed by the commissioner; and
(2) verified by at least two (2) principal officers of the limited
service health maintenance organization.
(b) In addition to the report required by subsection (a), a limited
service health maintenance organization shall file with the
commissioner on or before June 1 of each year an audited financial
statement of the limited service health maintenance organization for
the preceding calendar year.
(c) The commissioner may require any additional reports
necessary to enable the commissioner to carry out the duties of the
commissioner under this chapter. As added by P.L.26-1994, SEC.25.
IC 27-13-34-20 Suspension or revocation of certificate of authority
Sec. 20. (a) The commissioner may suspend or revoke the
certificate of authority issued to a limited service health maintenance
organization under this chapter or deny an application submitted
under this chapter upon determining that any of the following
conditions exist:
(1) The limited service health maintenance organization is
operating:
(A) significantly in contravention of the basic organizational
document of the organization; or
(B) in a manner contrary to that described in and reasonably
inferred from any other information submitted under section
8 of this chapter;
unless amendments to the organization's submissions have been
filed and authorized under section 11 of this chapter.
(2) The limited service health maintenance organization issues
an evidence of coverage that does not comply with the
requirements of section 13 of this chapter.
(3) The limited service health maintenance organization is
unable to fulfill its obligations to furnish limited health
services.
(4) The limited service health maintenance organization is not
financially responsible and may reasonably be expected to be
unable to meet its obligations to enrollees or prospective
enrollees.
(5) The net worth of the limited service health maintenance
organization is less than that required by section 16 of this
chapter, or the limited service health maintenance organization
has failed to correct any deficiency in its net worth as required
by the commissioner.
(6) The limited service health maintenance organization has
failed to implement in a reasonable manner the grievance
system required by IC 27-13-10.
(7) The continued operation of the limited service health
maintenance organization would be hazardous to the enrollees
of the organization.
(8) The limited service health maintenance organization has
otherwise failed to comply with this chapter.
(b) The commissioner may suspend or revoke a certificate of
authority or deny an application for a certificate of authority by
written order sent to the limited service health maintenance
organization by certified mail or registered mail. The written order
shall state the grounds for the suspension, revocation, or denial. A
limited service health maintenance organization may request in
writing a hearing within thirty (30) days after mailing of the order.
If the limited service health maintenance organization requests a
hearing within the time specified, the commissioner shall hold a
hearing, which may not be less than twenty (20) days or more than
sixty (60) days after the date of the notice for a hearing on the matter
under IC 4-21.5.
(c) Immediately after the certificate of authority of a limited
service health maintenance organization is revoked, the organization
shall proceed to wind up its affairs. An organization whose
certificate is revoked:
(1) shall not conduct further business except as may be essential
to the orderly conclusion of the affairs of the organization; and
(2) shall not engage in further advertising or solicitation.
However, the commissioner may, by written order, permit the further
operation of the organization as the commissioner may find to be in
the best interest of enrollees, to the end that enrollees will be
afforded the greatest practical opportunity to obtain continuing
limited health services. As added by P.L.26-1994, SEC.25.
IC 27-13-34-21 Chapter violations; fines and penalties
Sec. 21. (a) In place of any other penalty specified in this chapter,
or when no penalty is specifically provided, whenever any limited
service health maintenance organization or other person, corporation,
partnership, limited liability company, or entity subject to this
chapter has been found to have violated any provision of this chapter,
the commissioner may:
(1) issue and cause to be served upon the organization, person,
or entity charged with the violation a copy of the findings and
an order requiring the organization, person, or entity to cease
and desist from engaging in the act or practice that constitutes
the violation; and
(2) impose a monetary penalty of not more than two thousand
five hundred dollars ($2,500) for each violation, but not to
exceed an aggregate penalty of twenty-five thousand dollars
($25,000).
(b) A limited service health maintenance organization may appeal
any action taken by the commissioner under this section within thirty
(30) days after receiving notice of the action by requesting a hearing
before the commissioner under IC 4-21.5. As added by P.L.26-1994, SEC.25.
IC 27-13-34-22 Supervision, rehabilitation, or liquidation; remedies and measures
Sec. 22. (a) Any supervision, rehabilitation, or liquidation of a
limited service health maintenance organization shall be considered
to be the supervision, rehabilitation, or liquidation of an insurance
company and shall be conducted under IC 27-9.
(b) A limited service health maintenance organization is not
subject to IC 27-6-8 or IC 27-8-8.
(c) The remedies and measures available to the commissioner
under this chapter are in addition to and not in the place of the
remedies and measures available to the commissioner under IC 27-9. As added by P.L.26-1994, SEC.25.
IC 27-13-34-23 Fees
Sec. 23. (a) A limited service health maintenance organization
subject to this chapter shall pay to the commissioner for deposit into
the department of insurance fund established by IC 27-1-3-28 the
following fees:
(1) For filing an application for a certificate of authority or an
amendment to an application, three hundred fifty dollars ($350).
(2) For filing each annual report, fifty dollars ($50).
(b) In addition to the fees required by subsection (a), a limited
service health maintenance organization subject to this chapter must
pay the fees required by IC 27-1-3-15. As added by P.L.26-1994, SEC.25. Amended by P.L.173-2007,
SEC.45; P.L.234-2007, SEC.199.
IC 27-13-34-24 Dental care services and director; review of adverse decisions;
complaints
Sec. 24. (a) A limited service health maintenance organization
that provides dental care services shall appoint a dental director who
has an unlimited license to practice dentistry under IC 25-14 or an
equivalent license issued by another state.
(b) The dental director appointed under subsection (a) is
responsible for oversight of treatment policies, protocols, quality
assurance activities, credentialing of participating providers, and
utilization management decisions of the limited service health
maintenance organization.
(c) A limited service health maintenance organization that
provides dental care services shall contract with or employ at least
one (1) individual who holds an unlimited license to practice
dentistry under IC 25-14 or an equivalent license issued by another
state to do the following:
(1) Develop, in consultation with a group of appropriate
providers, the limited service health maintenance organization's
treatment policies, protocols, and quality assurance activities.
(2) Respond when a treating provider requests in writing that a
dentist reconsider an adverse utilization review decision.
(d) A limited service health maintenance organization that
provides dental care services that receives a written request for
reconsideration of an adverse utilization review decision from a
treating provider shall:
(1) review the decision as expeditiously as possible; and
(2) provide a response to the treating provider not more than ten
(10) business days after receiving the request.
(e) A limited service health maintenance organization that
provides dental care services shall provide participating providers
with an opportunity to comment on the following:
(1) Treatment policies.
(2) Protocols.
(3) Quality assurance activities.
(4) Credentialing policies and procedures.
(5) Utilization management policies and procedures. As added by P.L.91-2000, SEC.1. IC 27-13-34-26 Complaints; records
Sec. 26. (a) The department shall maintain records concerning
complaints filed against a limited service health maintenance
organization that provides dental care services.
(b) The department shall classify complaints described in
subsection (a) in categories according to the National Association of
Insurance Commissioners standardized complaint report procedures.
(c) The department shall classify the disposition of complaints in
each category by:
(1) number of complaints for which corrective action is
considered necessary by the department; and
(2) number of complaints classified by National Association of
Insurance Commissioners disposition codes.
(d) The department shall make information specified in this
section available to the public in a form that does not identify any
specific individual.
(e) A limited service health maintenance organization that
provides dental care services may not take any retaliatory action,
including cancellation or refusal to renew a participating provider
contract, individual contract, or group contract, solely because a
participating provider, enrollee, or individual or group contract
holder files a complaint against the limited service health
maintenance organization. As added by P.L.91-2000, SEC.2.
