0001| AN ACT | 0002| RELATING TO HEALTH CARE PROVIDERS; ENACTING THE PROVIDER SERVICE | 0003| NETWORK ACT; CLARIFYING THE REQUIREMENT FOR A CERTIFICATE OF | 0004| AUTHORITY UNDER THE NEW MEXICO INSURANCE CODE; PROVIDING FOR A | 0005| GUARANTY ASSOCIATION; MAKING AN APPROPRIATION. | 0006| | 0007| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: | 0008| Section 1. SHORT TITLE.--Sections 1 through 10 of this act may be cited as the | 0009| "Provider Service Network Act". | 0010| Section 2. DEFINITIONS.--As used in the Provider Service Network Act: | 0011| A. "association" means the provider service network guaranty association; | 0012| B. "board" means the provider service network guaranty board; | 0013| C. "health care facility" means an institution providing health care services, | 0014| including a hospital or other licensed inpatient center, an ambulatory surgical or treatment center, | 0015| a skilled nursing center, a residential treatment center, a home health agency, a diagnostic, | 0016| laboratory or imaging center and a rehabilitation or other therapeutic health setting; | 0017| D. "health care insurer" means a person that has a valid certificate of authority in | 0018| good standing under the New Mexico Insurance Code to act as an insurer, health maintenance | 0019| organization, nonprofit health care plan or prepaid dental plan; | 0020| E. "health care professional" means a physician or other health care practitioner, | 0021| including a pharmacist, who is licensed, certified or otherwise authorized by the state to provide | 0022| health care services consistent with state law; | 0023| F. "health care services" includes physical health services or community-based | 0024| mental health or developmental disability services, including services for developmental delay; | 0025| G. "person" means an individual or other legal entity; | 0001| H. "provider" means a person that is licensed or otherwise authorized by the state | 0002| to furnish health care services, including health care professionals and health care facilities; and | 0003| I. "provider service network" means two or more providers affiliated for the | 0004| purpose of providing health care services on a capitated or similar prepaid, flat-fee basis. | 0005| Section 3. PROVIDER SERVICE NETWORKS--INSURANCE CODE | 0006| APPLICABILITY.-- | 0007| A. Except as provided otherwise in this section, a provider service network shall | 0008| obtain and maintain a certificate of authority under the New Mexico Insurance Code. | 0009| B. A provider service network is not required to obtain or maintain a certificate of | 0010| authority in connection with health care coverage for which the risk of loss is directly and fully | 0011| underwritten by a health care insurer, subject to any applicable deductible, coinsurance or | 0012| copayment provisions. | 0013| C. A provider service network that obtains and maintains a certificate of authority | 0014| as a health care insurer may contract directly with government agencies to provide goods and | 0015| services to persons receiving public assistance, including medicare and medicaid. | 0016| D. A provider service network that does not obtain or maintain a certificate of | 0017| authority as a health care insurer may contract in appropriate circumstances, including | 0018| membership and participation in the association, directly with government agencies to provide | 0019| goods and services to persons receiving public assistance, including medicare and medicaid. The | 0020| contract shall incorporate and be subject to specific financial, quality-of-service and consumer- | 0021| protection standards that the contracting agency shall specify by regulation. | 0022| E. This section does not abrogate any other New Mexico Insurance Code | 0023| requirements that may be applicable to provider service networks, including requirements | 0024| relating to third-party administrators and examinations. This section does not bar or restrict the | 0025| right of a provider service network to obtain and maintain a certificate of authority. | 0001| Section 4. GUARANTY ASSOCIATION AND BOARD--CREATED-- | 0002| MEMBERSHIP.-- | 0003| A. The "provider service network guaranty association" is created as an | 0004| independent public nonprofit corporation. The association's purpose is to guarantee health care | 0005| services obligations of its members in the event of financial insolvency, bankruptcy or other | 0006| inability or failure to perform based on financial difficulties. All provider service networks | 0007| contracting to provide services to public assistance recipients pursuant to Subsection D of | 0008| Section 3 of the Provider Service Network Act shall organize and be members of the association. | 0009| The association is not and shall not be deemed a governmental agency or instrumentality for any | 0010| purpose. | 0011| B. The "provider service network guaranty board" is created. The board shall | 0012| consist of the superintendent of insurance or his designee, who shall be a nonvoting, ex-officio | 0013| member, and five voting members as follows: | 0014| (1) the secretary of human services or his designee; | 0015| (2) two representatives of the provider service network industry, who | 0016| shall be appointed by majority vote of the association's members; and | 0017| (3) two representatives of the health insurance industry, who shall be | 0018| appointed by majority vote of the association's members. | 0019| C. The association shall operate subject to the board's supervision and approval. | 0020| The board is a state government entity for purposes of the Tort Claims Act. | 0021| D. The secretary of human services shall notify the superintendent of insurance | 0022| and the association of each contract signed pursuant to Subsection D of Section 3 of the Provider | 0023| Service Network Act. | 0024| E. The superintendent of insurance shall give notice at least sixty days before the | 0025| proposed effective date of the first contract entered into pursuant to Subsection D of Section 3 of | 0001| the Provider Service Network Act, to each provider service network so contracting, stating the | 0002| time and place of the association's initial organizational meeting. | 0003| F. At the organizational meeting and at all successive meetings, each association | 0004| member shall be entitled to one vote. At the organizational meeting and any subsequent meeting | 0005| at which board members are to be appointed, the association members shall elect the appointive | 0006| board members by majority vote. At the organizational meeting, the members shall instruct the | 0007| board concerning preparation of a proposed plan of operation for the association. | 0008| G. Appointive board members shall have initial terms of three years or less, | 0009| staggered so that the term of at least one such board member expires on June 30 of each year. | 0010| Following the initial terms, appointive board members shall have three-year terms. When a | 0011| vacancy occurs in the position of an appointive board member, the remaining board members | 0012| shall appoint a successor who meets the required qualifications for that position for the balance | 0013| of the unexpired term. Board members may be reimbursed by the association as provided in the | 0014| Per Diem and Mileage Act but shall receive no other compensation, perquisite or allowance. | 0015| Section 5. PLAN OF OPERATION.-- | 0016| A. The board shall submit to the superintendent of insurance for approval a plan | 0017| of operation and any subsequent amendments necessary or suitable to assure proper and fair | 0018| operation of the association. | 0019| B. After notice and hearing, the superintendent of insurance shall approve or | 0020| disapprove the plan of operation or any subsequent amendments. The superintendent shall | 0021| approve the plan or an amendment only if he finds that it provides for administering the | 0022| association on a fair, reasonable and equitable basis and for sharing the association's losses on an | 0023| equitable basis. The plan of operation or amendment shall become effective upon the | 0024| superintendent's written approval. | 0025| C. If the board fails to submit a plan of operation satisfactory to the | 0001| superintendent of insurance within ninety days after the initial board is appointed or fails in a | 0002| timely manner to submit any amendment the superintendent deems necessary at any time | 0003| thereafter, the superintendent shall adopt and promulgate such plan of operation or amendment | 0004| by rule. Any such rule shall continue in force until the superintendent modifies it or approves a | 0005| plan of operation or an amendment submitted by the board that he deems to supersede the rule. | 0006| D. The plan of operation submitted to the superintendent of insurance shall: | 0007| (1) establish procedures for handling and accounting of the association's | 0008| money, other assets and property; | 0009| (2) provide for payment of claims or provision of alternative health care | 0010| services to public assistance recipients; | 0011| (3) establish regular times and places for board meetings; | 0012| (4) establish procedures for records to be kept of all financial transactions | 0013| and for annual fiscal reporting to the superintendent; | 0014| (5) establish procedures for the determination and collection of | 0015| assessments from members to pay claims or to provide alternative health care services and | 0016| administrative expenses incurred or estimated to be incurred during the period for which the | 0017| assessment is made; | 0018| (6) establish penalties for nonpayment or late payment of assessments; | 0019| and | 0020| (7) contain any additional provisions necessary and proper for the | 0021| execution of the association's powers and duties. | 0022| Section 6. BOARD--POWERS AND DUTIES.--The board has the power and authority | 0023| to: | 0024| A. enter into contracts necessary or proper to carry out the provisions and | 0025| purposes of the Provider Service Network Act, including contracts with independent contractors | 0001| for the performance of the association's administrative functions; | 0002| B. sue or be sued; | 0003| C. determine and pay the association's obligations, including its obligation to pay | 0004| claims or to provide alternative health care services to public assistance recipients on behalf of an | 0005| insolvent or financially troubled provider service network; | 0006| D. borrow money to satisfy the association's obligations; | 0007| E. assess association members in accordance with the provisions of the Provider | 0008| Service Network Act and make initial and interim assessments as may be reasonable and | 0009| necessary for organizational or interim operating expenses. Interim expense assessments shall be | 0010| credited as offsets against any regular assessments due following the close of the calendar year; | 0011| F. recoup expenditures on behalf of an insolvent or financially troubled provider | 0012| service network from that provider service network or any other available source, including a | 0013| governmental agency, and be subrogated to that provider service network's rights to payment to | 0014| the extent of such expenditures; | 0015| G. employ or contract with appropriate legal, actuarial, clerical and other | 0016| personnel as necessary to provide assistance in the operation of the association; | 0017| H. conduct periodic audits to assure the general accuracy of the financial data | 0018| submitted to the association. The board shall cause the association to undergo an annual audit on | 0019| a calendar-year basis of its financial records and operations by an independent certified public | 0020| accountant; | 0021| I. take all other actions, whether like or unlike the | 0022| foregoing, necessary or appropriate to carry out the board's or | 0023| the association's duties; | 0024| J. reinsure any or all of the risk of the association; and | 0025| K. assess each original and new provider service network an initial administrative | 0001| fee of five thousand dollars ($5,000) times the number of providers in the provider service | 0002| network. If a provider service network adds new members to increase the number of providers, | 0003| then that provider service network shall pay an additional administrative fee of five thousand | 0004| dollars ($5,000) for each additional provider. An employee of a provider shall not be used in | 0005| computing the administrative fee due under this subsection. | 0006| Section 7. EXAMINATION.-- | 0007| A. The association is subject to and responsible to pay the cost of examination by | 0008| the superintendent of insurance on a periodic basis, pursuant to Chapter 59A, Article 4 NMSA | 0009| 1978. | 0010| B. Not later than March 31 of each year, the board shall submit to the | 0011| superintendent an audited financial report for the preceding calendar year in a form approved by | 0012| the superintendent. | 0013| Section 8. ASSESSMENTS--FUND CREATED.-- | 0014| A. The "provider service network guarantee fund" is created in the state treasury. | 0015| The fund shall be administered by the board and money in the fund is appropriated to the board | 0016| to carry out the provisions of the Provider Service Network Act. Money in the fund shall be | 0017| invested by the state treasurer as other state funds are invested; provided that interest on the fund | 0018| shall be credited to the fund. Any unexpended or unencumbered balance remaining in the fund at | 0019| the end of any fiscal year shall not revert. | 0020| B. The secretary of human services shall report to the board within thirty days of | 0021| the close of each calendar quarter the amounts paid each member for services to public assistance | 0022| recipients during that calendar quarter. | 0023| C. The proportion of participation of each member shall be determined annually | 0024| by the board based on the secretary of human services' report, together with members' annual | 0025| statements and other reports deemed necessary by the board. | 0001| D. The assessment for each member shall be determined by multiplying the | 0002| member's income from services to public assistance recipients pursuant to Subsection D of | 0003| Section 3 of the Provider Service Network Act for the preceding calendar quarter by a percentage | 0004| set by the board not to exceed five percent. | 0005| E. The board shall notify each member of the amount of the assessment within | 0006| forty-five days of the close of a calendar quarter. The member shall pay the assessment within | 0007| sixty days of the close of a calendar quarter. | 0008| F. The board may abate or defer, in whole or in part, the assessment of a member | 0009| if, in the opinion of the board, payment of the assessment would endanger the ability of the | 0010| member to fulfill its contractual obligations. In the event an assessment against a member is | 0011| abated or deferred in whole or in part, the amount by which such assessment is abated or deferred | 0012| may be assessed against the other members in a manner consistent with the basis for assessments | 0013| set forth in Subsection A of this section. The member receiving the abatement or deferment shall | 0014| remain liable to the association for the deficiency for four years. | 0015| G. If assessments exceed actual expenses in any year, the excess shall be held at | 0016| interest and used by the board to offset future expenses. Any deficit incurred shall be recouped | 0017| by assessments apportioned among the association's members pursuant to the assessment formula | 0018| provided by Subsection D of this section. | 0019| H. If it appears that the maximum assessment available, together with | 0020| unencumbered money and other assets, will be insufficient in any year to make all necessary | 0021| payments, the association's obligations shall be paid pro rata. The unpaid portion shall be paid as | 0022| soon as additional assessment proceeds or other assets become available. Notwithstanding the | 0023| foregoing, the association may pay its obligations in any order it deems reasonable. | 0024| Section 9. NOTIFICATION TO PAY CLAIMS OR PROVIDE SERVICES.-- | 0025| A. The association shall be liable to pay claims or to provide alternative health | 0001| care services for insolvent or financially troubled members who are not fulfilling obligations to | 0002| provide such services to public assistance recipients under contracts pursuant to Subsection D of | 0003| Section 3 of the Provider Service Network Act. The association's obligation shall commence | 0004| on the date the secretary of human services gives the association notice that a member is failing, | 0005| because of insolvency or financial difficulties, to provide some or all of such services. | 0006| B. Nothing the Provider Service Network Act shall be deemed to authorize or | 0007| obligate the association to pay or otherwise assume any obligation of a provider service network | 0008| prior to the date of notification, or any obligation thereafter other than the obligation to provide | 0009| services to public assistance recipients under a contract pursuant to Subsection D of Section 3 of | 0010| the Provider Service Network Act. In no event shall the association be liable to the creditors of a | 0011| provider service network. | 0012| Section 10. A new Section 59A-5-11.1 NMSA 1978 is enacted to read: | 0013| "59A-5-11.1. EXEMPTION FROM AUTHORITY REQUIREMENT-- | 0014| PROVIDER SERVICE NETWORKS.--A certificate of authority shall not be required of a | 0015| provider service network, except as provided in the Provider Service Network Act." | 0016| |