354.410. 1. The director shall issue or deny a certificate ofauthority to any person filing an application pursuant to section 354.405.Issuance of a certificate of authority may then be granted upon payment ofthe application fee prescribed in section 354.500 if the director issatisfied that the following conditions are met:
(1) The persons responsible for the conduct of the affairs of theapplicant are competent, trustworthy, and possess good reputations;
(2) The health care organization constitutes an appropriate mechanismwhereby the health maintenance organization will effectively provide orarrange for the provision of basic health care services on a prepaid basisthrough insurance or otherwise, except to the extent of reasonablerequirements for co-payments;
(3) The health maintenance organization is financially responsibleand may reasonably be expected to meet its obligations to enrollees andprospective enrollees. In making this determination, the director mayconsider:
(a) The financial soundness of the arrangements for health careservices and the schedule of charges used in connection therewith;
(b) The adequacy of working capital;
(c) Any agreement with an insurer, a government, or any otherorganization for insuring the payment of the cost of health care servicesor the provision for automatic applicability of an alternative coverage inthe event of discontinuance of the health maintenance organization;
(d) Any agreement with providers for the provision of health careservices; and
(e) Any deposit of cash or securities submitted in accordance withsubsection 2;
(4) The health maintenance organization's arrangements for healthcare services and the schedule of charges used in connection therewith arefinancially sound;
(5) The working capital be adequate;
(6) Any agreement with an insurer, a health service corporation, agovernment, or any other organization for insuring the payment of the costof health care services contain a provision for the automatic applicabilityof alternative coverage in the event of discontinuance of the healthmaintenance organization;
(7) There be an agreement with providers for the provision of healthcare services;
(8) The enrollees shall be afforded an opportunity to participate inmatters of policy and operation pursuant to section 354.420;
(9) Nothing in the proposed method of operation, as shown by theinformation submitted pursuant to section 354.405 or by independentinvestigation, is contrary to the public interest;
(10) The health maintenance organization is able to provide itsenrollees with adequate access to health care providers.
2. Unless otherwise provided below, each health maintenanceorganization shall deposit with the director, or with any organization ortrustee acceptable to the director through which a custodial or controlledaccount is utilized, cash, securities, or any combination of these or othermeasures that is acceptable to the director in the amount set forth in thissubsection:
(1) The amount for an organization that is beginning operation shallbe the greater of: (a) five percent of its estimated expenditures forhealth care services for its first year of operation, (b) twice itsestimated average monthly uncovered expenditures for its first year ofoperation, or (c) one hundred fifty thousand dollars for a medicalgroup/staff model, or three hundred thousand dollars for an individualpractice association. At the beginning of each succeeding year, unless notapplicable, the organization shall deposit with the director, ororganization or trustee, cash, securities, or any combination of these orother measures acceptable to the director, in an amount equal to fourpercent of its estimated annual uncovered expenditures for that year.
(2) Unless not applicable, an organization that is in operation onSeptember 28, 1983, shall make a deposit equal to the larger of: (a) onepercent of the preceding twelve months' uncovered expenditures, or (b) onehundred fifty thousand dollars for a medical group/staff model, or threehundred thousand dollars for an individual practice association on thefirst day of the first calendar year beginning six months or more afterSeptember 28, 1983. In the second calendar year, if applicable, the amountof the additional deposit shall be equal to two percent of its estimatedannual uncovered expenditures. In the third calendar year, if applicable,the additional deposit shall be equal to three percent of its estimatedannual uncovered expenditures for that year, and in the fourth calendaryear and subsequent years, if applicable, the additional deposit shall beequal to four percent of its estimated annual uncovered expenditures foreach year. Each year's estimate, after the first year of operation, shallreasonably reflect the prior years' operating experience and deliveryarrangements. The director may waive any of the deposit requirements setforth in subdivisions (1) and (2) above, whenever satisfied that theorganization has sufficient net worth and an adequate history of generatingnet income to assure its financial viability for the next year, or itsperformance and obligations are guaranteed by an organization withsufficient net worth and an adequate history of generating net income, orthe assets of the organization or its contracts with insurers, hospital ormedical service corporations, governments, or other organizations aresufficient to reasonably assure the performance of its obligations.
3. When an organization has achieved a net worth not including land,buildings, and equipment, of at least one million dollars or has achieved anet worth including organization-related land, buildings, and equipment ofat least five million dollars, the annual deposit requirements shall notapply. The annual deposit requirement shall not apply to an organizationif the total amount of the deposit is equal to twenty-five percent of itsestimated annual uncovered expenditures for the next calendar year, or thecapital and surplus requirements for the formation or admittance of anaccident and health insurer in this state, whichever is less. If theorganization has a guaranteeing organization which has been in operationfor at least five years and has a net worth not including land, buildings,and equipment of at least one million dollars or which has been inoperation for at least ten years and has a net worth includingorganization-related land, buildings, and equipment of at least fivemillion dollars, the annual deposit requirement shall not apply; provided,however, that if the guaranteeing organization is sponsoring more than oneorganization, the net worth requirement shall be increased by a multipleequal to the number of such organizations. This requirement to maintain adeposit in excess of the deposit required of an accident and health insurershall not apply during any time that the guaranteeing organizationmaintains a net worth at least equal to the capital and surplusrequirements for an accident and health insurer for each organization itsponsors.
4. All income from deposits shall belong to the depositingorganization and shall be paid to it as it becomes available. A healthmaintenance organization that has made a securities deposit may withdrawthe securities deposit or any part thereof, first having deposited, in lieuthereof, a deposit of cash, securities, or any combination of these orother measures of equal amount and value to that withdrawn. Any securitiesshall be approved by the director before being substituted.
5. In any year in which an annual deposit is not required of anorganization, at its request the director shall reduce the required depositby one hundred thousand dollars for each two hundred fifty thousand dollarsof net worth in excess of the amount that allows it not to make an annualdeposit. If the amount of net worth no longer supports a reduction of itsrequired deposit, the organization shall immediately redeposit one hundredthousand dollars for each two hundred fifty thousand dollars of reductionin net worth, provided that its total deposit shall not exceed the maximumrequired under this section. Notwithstanding any provisions of sections354.400 to 354.636, the deposit held by the director shall in no case beless than one hundred fifty thousand dollars for a group staff/model orthree hundred thousand dollars for an individual practice associationmodel.
6. Each health maintenance organization that obtains a certificate ofauthority after September 28, 1983, shall have and maintain a capitalaccount of at least one hundred fifty thousand dollars for a medicalgroup/staff model, or three hundred thousand dollars for an individualpractice association in addition to any deposit requirements under thissection. The capital account shall be net of any accrued liabilities andbe in the form of cash, securities or any combination of these or othermeasures acceptable to the director.
7. A certificate of authority shall be denied only after compliancewith the requirements of section 354.490.
354.410. 1. The director shall issue or deny a certificate ofauthority to any person filing an application pursuant to section 354.405.Issuance of a certificate of authority may then be granted upon payment ofthe application fee prescribed in section 354.500 if the director issatisfied that the following conditions are met:
(1) The persons responsible for the conduct of the affairs of theapplicant are competent, trustworthy, and possess good reputations;
(2) The health care organization constitutes an appropriate mechanismwhereby the health maintenance organization will effectively provide orarrange for the provision of basic health care services on a prepaid basisthrough insurance or otherwise, except to the extent of reasonablerequirements for co-payments;
(3) The health maintenance organization is financially responsibleand may reasonably be expected to meet its obligations to enrollees andprospective enrollees. In making this determination, the director mayconsider:
(a) The financial soundness of the arrangements for health careservices and the schedule of charges used in connection therewith;
(b) The adequacy of working capital;
(c) Any agreement with an insurer, a government, or any otherorganization for insuring the payment of the cost of health care servicesor the provision for automatic applicability of an alternative coverage inthe event of discontinuance of the health maintenance organization;
(d) Any agreement with providers for the provision of health careservices; and
(e) Any deposit of cash or securities submitted in accordance withsubsection 2;
(4) The health maintenance organization's arrangements for healthcare services and the schedule of charges used in connection therewith arefinancially sound;
(5) The working capital be adequate;
(6) Any agreement with an insurer, a health service corporation, agovernment, or any other organization for insuring the payment of the costof health care services contain a provision for the automatic applicabilityof alternative coverage in the event of discontinuance of the healthmaintenance organization;
(7) There be an agreement with providers for the provision of healthcare services;
(8) The enrollees shall be afforded an opportunity to participate inmatters of policy and operation pursuant to section 354.420;
(9) Nothing in the proposed method of operation, as shown by theinformation submitted pursuant to section 354.405 or by independentinvestigation, is contrary to the public interest;
(10) The health maintenance organization is able to provide itsenrollees with adequate access to health care providers.
2. Unless otherwise provided below, each health maintenanceorganization shall deposit with the director, or with any organization ortrustee acceptable to the director through which a custodial or controlledaccount is utilized, cash, securities, or any combination of these or othermeasures that is acceptable to the director in the amount set forth in thissubsection:
(1) The amount for an organization that is beginning operation shallbe the greater of: (a) five percent of its estimated expenditures forhealth care services for its first year of operation, (b) twice itsestimated average monthly uncovered expenditures for its first year ofoperation, or (c) one hundred fifty thousand dollars for a medicalgroup/staff model, or three hundred thousand dollars for an individualpractice association. At the beginning of each succeeding year, unless notapplicable, the organization shall deposit with the director, ororganization or trustee, cash, securities, or any combination of these orother measures acceptable to the director, in an amount equal to fourpercent of its estimated annual uncovered expenditures for that year.
(2) Unless not applicable, an organization that is in operation onSeptember 28, 1983, shall make a deposit equal to the larger of: (a) onepercent of the preceding twelve months' uncovered expenditures, or (b) onehundred fifty thousand dollars for a medical group/staff model, or threehundred thousand dollars for an individual practice association on thefirst day of the first calendar year beginning six months or more afterSeptember 28, 1983. In the second calendar year, if applicable, the amountof the additional deposit shall be equal to two percent of its estimatedannual uncovered expenditures. In the third calendar year, if applicable,the additional deposit shall be equal to three percent of its estimatedannual uncovered expenditures for that year, and in the fourth calendaryear and subsequent years, if applicable, the additional deposit shall beequal to four percent of its estimated annual uncovered expenditures foreach year. Each year's estimate, after the first year of operation, shallreasonably reflect the prior years' operating experience and deliveryarrangements. The director may waive any of the deposit requirements setforth in subdivisions (1) and (2) above, whenever satisfied that theorganization has sufficient net worth and an adequate history of generatingnet income to assure its financial viability for the next year, or itsperformance and obligations are guaranteed by an organization withsufficient net worth and an adequate history of generating net income, orthe assets of the organization or its contracts with insurers, hospital ormedical service corporations, governments, or other organizations aresufficient to reasonably assure the performance of its obligations.
3. When an organization has achieved a net worth not including land,buildings, and equipment, of at least one million dollars or has achieved anet worth including organization-related land, buildings, and equipment ofat least five million dollars, the annual deposit requirements shall notapply. The annual deposit requirement shall not apply to an organizationif the total amount of the deposit is equal to twenty-five percent of itsestimated annual uncovered expenditures for the next calendar year, or thecapital and surplus requirements for the formation or admittance of anaccident and health insurer in this state, whichever is less. If theorganization has a guaranteeing organization which has been in operationfor at least five years and has a net worth not including land, buildings,and equipment of at least one million dollars or which has been inoperation for at least ten years and has a net worth includingorganization-related land, buildings, and equipment of at least fivemillion dollars, the annual deposit requirement shall not apply; provided,however, that if the guaranteeing organization is sponsoring more than oneorganization, the net worth requirement shall be increased by a multipleequal to the number of such organizations. This requirement to maintain adeposit in excess of the deposit required of an accident and health insurershall not apply during any time that the guaranteeing organizationmaintains a net worth at least equal to the capital and surplusrequirements for an accident and health insurer for each organization itsponsors.
4. All income from deposits shall belong to the depositingorganization and shall be paid to it as it becomes available. A healthmaintenance organization that has made a securities deposit may withdrawthe securities deposit or any part thereof, first having deposited, in lieuthereof, a deposit of cash, securities, or any combination of these orother measures of equal amount and value to that withdrawn. Any securitiesshall be approved by the director before being substituted.
5. In any year in which an annual deposit is not required of anorganization, at its request the director shall reduce the required depositby one hundred thousand dollars for each two hundred fifty thousand dollarsof net worth in excess of the amount that allows it not to make an annualdeposit. If the amount of net worth no longer supports a reduction of itsrequired deposit, the organization shall immediately redeposit one hundredthousand dollars for each two hundred fifty thousand dollars of reductionin net worth, provided that its total deposit shall not exceed the maximumrequired under this section. Notwithstanding any provisions of sections354.400 to 354.636, the deposit held by the director shall in no case beless than one hundred fifty thousand dollars for a group staff/model orthree hundred thousand dollars for an individual practice associationmodel.
6. Each health maintenance organization that obtains a certificate ofauthority after September 28, 1983, shall have and maintain a capitalaccount of at least one hundred fifty thousand dollars for a medicalgroup/staff model, or three hundred thousand dollars for an individualpractice association in addition to any deposit requirements under thissection. The capital account shall be net of any accrued liabilities andbe in the form of cash, securities or any combination of these or othermeasures acceptable to the director.
7. A certificate of authority shall be denied only after compliancewith the requirements of section 354.490.
354.410. 1. The director shall issue or deny a certificate ofauthority to any person filing an application pursuant to section 354.405.Issuance of a certificate of authority may then be granted upon payment ofthe application fee prescribed in section 354.500 if the director issatisfied that the following conditions are met:
(1) The persons responsible for the conduct of the affairs of theapplicant are competent, trustworthy, and possess good reputations;
(2) The health care organization constitutes an appropriate mechanismwhereby the health maintenance organization will effectively provide orarrange for the provision of basic health care services on a prepaid basisthrough insurance or otherwise, except to the extent of reasonablerequirements for co-payments;
(3) The health maintenance organization is financially responsibleand may reasonably be expected to meet its obligations to enrollees andprospective enrollees. In making this determination, the director mayconsider:
(a) The financial soundness of the arrangements for health careservices and the schedule of charges used in connection therewith;
(b) The adequacy of working capital;
(c) Any agreement with an insurer, a government, or any otherorganization for insuring the payment of the cost of health care servicesor the provision for automatic applicability of an alternative coverage inthe event of discontinuance of the health maintenance organization;
(d) Any agreement with providers for the provision of health careservices; and
(e) Any deposit of cash or securities submitted in accordance withsubsection 2;
(4) The health maintenance organization's arrangements for healthcare services and the schedule of charges used in connection therewith arefinancially sound;
(5) The working capital be adequate;
(6) Any agreement with an insurer, a health service corporation, agovernment, or any other organization for insuring the payment of the costof health care services contain a provision for the automatic applicabilityof alternative coverage in the event of discontinuance of the healthmaintenance organization;
(7) There be an agreement with providers for the provision of healthcare services;
(8) The enrollees shall be afforded an opportunity to participate inmatters of policy and operation pursuant to section 354.420;
(9) Nothing in the proposed method of operation, as shown by theinformation submitted pursuant to section 354.405 or by independentinvestigation, is contrary to the public interest;
(10) The health maintenance organization is able to provide itsenrollees with adequate access to health care providers.
2. Unless otherwise provided below, each health maintenanceorganization shall deposit with the director, or with any organization ortrustee acceptable to the director through which a custodial or controlledaccount is utilized, cash, securities, or any combination of these or othermeasures that is acceptable to the director in the amount set forth in thissubsection:
(1) The amount for an organization that is beginning operation shallbe the greater of: (a) five percent of its estimated expenditures forhealth care services for its first year of operation, (b) twice itsestimated average monthly uncovered expenditures for its first year ofoperation, or (c) one hundred fifty thousand dollars for a medicalgroup/staff model, or three hundred thousand dollars for an individualpractice association. At the beginning of each succeeding year, unless notapplicable, the organization shall deposit with the director, ororganization or trustee, cash, securities, or any combination of these orother measures acceptable to the director, in an amount equal to fourpercent of its estimated annual uncovered expenditures for that year.
(2) Unless not applicable, an organization that is in operation onSeptember 28, 1983, shall make a deposit equal to the larger of: (a) onepercent of the preceding twelve months' uncovered expenditures, or (b) onehundred fifty thousand dollars for a medical group/staff model, or threehundred thousand dollars for an individual practice association on thefirst day of the first calendar year beginning six months or more afterSeptember 28, 1983. In the second calendar year, if applicable, the amountof the additional deposit shall be equal to two percent of its estimatedannual uncovered expenditures. In the third calendar year, if applicable,the additional deposit shall be equal to three percent of its estimatedannual uncovered expenditures for that year, and in the fourth calendaryear and subsequent years, if applicable, the additional deposit shall beequal to four percent of its estimated annual uncovered expenditures foreach year. Each year's estimate, after the first year of operation, shallreasonably reflect the prior years' operating experience and deliveryarrangements. The director may waive any of the deposit requirements setforth in subdivisions (1) and (2) above, whenever satisfied that theorganization has sufficient net worth and an adequate history of generatingnet income to assure its financial viability for the next year, or itsperformance and obligations are guaranteed by an organization withsufficient net worth and an adequate history of generating net income, orthe assets of the organization or its contracts with insurers, hospital ormedical service corporations, governments, or other organizations aresufficient to reasonably assure the performance of its obligations.
3. When an organization has achieved a net worth not including land,buildings, and equipment, of at least one million dollars or has achieved anet worth including organization-related land, buildings, and equipment ofat least five million dollars, the annual deposit requirements shall notapply. The annual deposit requirement shall not apply to an organizationif the total amount of the deposit is equal to twenty-five percent of itsestimated annual uncovered expenditures for the next calendar year, or thecapital and surplus requirements for the formation or admittance of anaccident and health insurer in this state, whichever is less. If theorganization has a guaranteeing organization which has been in operationfor at least five years and has a net worth not including land, buildings,and equipment of at least one million dollars or which has been inoperation for at least ten years and has a net worth includingorganization-related land, buildings, and equipment of at least fivemillion dollars, the annual deposit requirement shall not apply; provided,however, that if the guaranteeing organization is sponsoring more than oneorganization, the net worth requirement shall be increased by a multipleequal to the number of such organizations. This requirement to maintain adeposit in excess of the deposit required of an accident and health insurershall not apply during any time that the guaranteeing organizationmaintains a net worth at least equal to the capital and surplusrequirements for an accident and health insurer for each organization itsponsors.
4. All income from deposits shall belong to the depositingorganization and shall be paid to it as it becomes available. A healthmaintenance organization that has made a securities deposit may withdrawthe securities deposit or any part thereof, first having deposited, in lieuthereof, a deposit of cash, securities, or any combination of these orother measures of equal amount and value to that withdrawn. Any securitiesshall be approved by the director before being substituted.
5. In any year in which an annual deposit is not required of anorganization, at its request the director shall reduce the required depositby one hundred thousand dollars for each two hundred fifty thousand dollarsof net worth in excess of the amount that allows it not to make an annualdeposit. If the amount of net worth no longer supports a reduction of itsrequired deposit, the organization shall immediately redeposit one hundredthousand dollars for each two hundred fifty thousand dollars of reductionin net worth, provided that its total deposit shall not exceed the maximumrequired under this section. Notwithstanding any provisions of sections354.400 to 354.636, the deposit held by the director shall in no case beless than one hundred fifty thousand dollars for a group staff/model orthree hundred thousand dollars for an individual practice associationmodel.
6. Each health maintenance organization that obtains a certificate ofauthority after September 28, 1983, shall have and maintain a capitalaccount of at least one hundred fifty thousand dollars for a medicalgroup/staff model, or three hundred thousand dollars for an individualpractice association in addition to any deposit requirements under thissection. The capital account shall be net of any accrued liabilities andbe in the form of cash, securities or any combination of these or othermeasures acceptable to the director.
7. A certificate of authority shall be denied only after compliancewith the requirements of section 354.490.
