0001| SENATE PUBLIC AFFAIRS COMMITTEE SUBSTITUTE FOR | 0002| SENATE BILL 189 | 0003| 43rd legislature - STATE OF NEW MEXICO - first session, 1997 | 0004| | 0005| | 0006| | 0007| | 0008| | 0009| | 0010| | 0011| AN ACT | 0012| RELATING TO HEALTH CARE PROVIDERS; ENACTING THE PROVIDER | 0013| SERVICE NETWORK ACT; CLARIFYING THE REQUIREMENT FOR A | 0014| CERTIFICATE OF AUTHORITY UNDER THE NEW MEXICO INSURANCE CODE; | 0015| PROVIDING FOR A GUARANTY ASSOCIATION. | 0016| | 0017| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: | 0018| Section 1. [NEW MATERIAL] SHORT TITLE.--Sections 1 | 0019| through 10 of this act may be cited as the "Provider Service | 0020| Network Act". | 0021| Section 2. [NEW MATERIAL] DEFINITIONS.--As used in the | 0022| Provider Service Network Act: | 0023| A. "association" means the provider service network | 0024| guaranty association; | 0025| B. "board" means the provider service network | 0001| guaranty board;. | 0002| C. "health care facility" means an institution | 0003| providing health care services, including a hospital or other | 0004| licensed inpatient center, an ambulatory surgical or treatment | 0005| center, a skilled nursing center, a residential treatment | 0006| center, a home health agency, a diagnostic, laboratory or | 0007| imaging center and a rehabilitation or other therapeutic health | 0008| setting; | 0009| D. "health care insurer" means a person that has a | 0010| valid certificate of authority in good standing under the New | 0011| Mexico Insurance Code to act as an insurer, health maintenance | 0012| organization, nonprofit health care plan or prepaid dental | 0013| plan; E. "health care professional" means a physician | 0014| or other health care practitioner, including a pharmacist, who | 0015| is licensed, certified or otherwise authorized by the state to | 0016| provide health care services consistent with state law; | 0017| F. "health care services" includes physical health | 0018| services or community-based mental health or developmental | 0019| disability services, including services for developmental | 0020| delay; | 0021| G. "person" means an individual or other legal | 0022| entity; H. "provider" means a person that is licensed or | 0023| otherwise authorized by the state to furnish health care | 0024| services, including health care professionals and health care | 0025| facilities; and | 0001| I. "provider service network" means two or more | 0002| providers affiliated for the purpose of providing health care | 0003| services on a capitated or similar prepaid, flat-fee basis. | 0004| Section 3. [NEW MATERIAL] PROVIDER SERVICE NETWORKS-- | 0005| INSURANCE CODE APPLICABILITY.-- | 0006| A. Except as provided otherwise in this section, a | 0007| provider service network shall obtain and maintain a certificate | 0008| of authority under the New Mexico Insurance Code. | 0009| B. A provider service network is not required to obtain | 0010| or maintain a certificate of authority in connection with health | 0011| care coverage for which the risk of loss is directly and fully | 0012| underwritten by a health care insurer, subject to any applicable | 0013| deductible, coinsurance or copayment provisions. | 0014| C. A provider service network that obtains and maintains | 0015| a certificate of authority as a health care insurer may contract | 0016| directly with government agencies to provide goods and services to | 0017| persons receiving public assistance, including medicare and | 0018| medicaid. | 0019| D. A provider service network that does not obtain or | 0020| maintain a certificate of authority as a health care insurer may | 0021| contract in appropriate circumstances, including membership and | 0022| participation in the association, directly with government | 0023| agencies to provide goods and services to persons receiving public | 0024| assistance, including medicare and medicaid. The contract shall | 0025| incorporate and be subject to specific financial, quality-of- | 0001| service and consumer-protection standards that the contracting | 0002| agency shall specify by regulation. | 0003| E. This section does not abrogate any other New Mexico | 0004| Insurance Code requirements that may be applicable to provider | 0005| service networks, including requirements relating to third-party | 0006| administrators and examinations. This section does not bar or | 0007| restrict the right of a provider service network to obtain and | 0008| maintain a certificate of authority. | 0009| Section 4. [NEW MATERIAL] GUARANTY ASSOCIATION AND BOARD-- | 0010| CREATED--MEMBERSHIP.-- | 0011| A. The "provider service network guaranty association" | 0012| is created as an independent public nonprofit corporation. The | 0013| association's purpose is to guarantee health care services | 0014| obligations of its members in the event of financial insolvency, | 0015| bankruptcy or other inability or failure to perform based on | 0016| financial difficulties. All provider service networks contracting | 0017| to provide services to public assistance recipients pursuant to | 0018| Subsection D of Section 3 of the Provider Service Network Act | 0019| shall organize and be members of the association. The association | 0020| is not and shall not be deemed a governmental agency or | 0021| instrumentality for any purpose. | 0022| B. The "provider service network guaranty board" is | 0023| created. The board shall consist of the superintendent of | 0024| insurance or his designee, who shall be a nonvoting, ex-officio | 0025| member, and five voting members as follows: | 0001| (1) the secretary of human services or his | 0002| designee, who shall serve ex officio; | 0003| (2) two representatives of the provider service | 0004| network industry, who shall be appointed by majority vote of the | 0005| association's members; and | 0006| (3) two representatives of the health insurance | 0007| industry, who shall be appointed by majority vote of the | 0008| association's members. | 0009| C. The association shall operate subject to the board's | 0010| supervision and approval. The board is a state government entity | 0011| for purposes of the Tort Claims Act. | 0012| D. The secretary of human services shall notify the | 0013| superintendent of insurance and the association of each contract | 0014| signed pursuant to Subsection D of Section 3 of the Provider | 0015| Service Network Act. | 0016| E. The superintendent of insurance shall give notice at | 0017| least sixty days before the proposed effective date of the first | 0018| contract entered into pursuant to Subsection D of Section 3 of the | 0019| Provider Service Network Act, to each provider service network so | 0020| contracting, stating the time and place of the association's | 0021| initial organizational meeting. | 0022| F. At the organizational meeting and at all successive | 0023| meetings, each association member shall be entitled to one vote. | 0024| At the organizational meeting and any subsequent meeting at which | 0025| board members are to be appointed, the association members shall | 0001| elect the appointive board members by majority vote. At the | 0002| organizational meeting, the members shall instruct the board | 0003| concerning preparation of a proposed plan of operation for the | 0004| association. | 0005| G. Appointive board members shall have initial terms of | 0006| three years or less, staggered so that the term of at least one | 0007| such board member expires on June 30 of each year. Following the | 0008| initial terms, appointive board members shall have three-year | 0009| terms. When a vacancy occurs in the position of an appointive | 0010| board member, the remaining board members shall appoint a | 0011| successor who meets the required qualifications for that position | 0012| for the balance of the unexpired term. Board members may be | 0013| reimbursed by the association as provided in the Per Diem and | 0014| Mileage Act but shall receive no other compensation, perquisite or | 0015| allowance. | 0016| Section 5. [NEW MATERIAL] PLAN OF OPERATION.-- | 0017| A. The board shall submit to the superintendent of | 0018| insurance for approval a plan of operation and any subsequent | 0019| amendments necessary or suitable to assure proper and fair | 0020| operation of the association. | 0021| B. After notice and hearing, the superintendent of | 0022| insurance shall approve or disapprove the plan of operation or any | 0023| subsequent amendments. The superintendent shall approve the plan | 0024| or an amendment only if he finds that it provides for | 0025| administering the association on a fair, reasonable and equitable | 0001| basis and for sharing the association's losses on an equitable | 0002| basis. The plan of operation or amendment shall become effective | 0003| upon the superintendent's written approval. | 0004| C. If the board fails to submit a plan of operation | 0005| satisfactory to the superintendent of insurance within ninety days | 0006| after the initial board is appointed or fails in a timely manner | 0007| to submit any amendment the superintendent deems necessary at any | 0008| time thereafter, the superintendent shall adopt and promulgate | 0009| such plan of operation or amendment by rule. Any such rule shall | 0010| continue in force until the superintendent modifies it or approves | 0011| a plan of operation or an amendment submitted by the board that he | 0012| deems to supersede the rule. | 0013| D. The plan of operation submitted to the superintendent | 0014| of insurance shall: | 0015| (1) establish procedures for handling and | 0016| accounting of the association's money, other assets and property; | 0017| (2) provide for payment of claims or provision of | 0018| alternative health care services to public assistance recipients; | 0019| (3) establish regular times and places for board | 0020| meetings; | 0021| (4) establish procedures for records to be kept of | 0022| all financial transactions and for annual fiscal reporting to the | 0023| superintendent; | 0024| (5) establish procedures for the determination and | 0025| collection of assessments from members to pay claims or to provide | 0001| alternative health care services and administrative expenses | 0002| incurred or estimated to be incurred during the period for which | 0003| the assessment is made; | 0004| (6) establish penalties for nonpayment or late | 0005| payment of assessments; and | 0006| (7) contain any additional provisions necessary and | 0007| proper for the execution of the association's powers and duties. | 0008| Section 6. [NEW MATERIAL] BOARD--POWERS AND DUTIES.--The | 0009| board has the power and authority to: | 0010| A. enter into contracts necessary or proper to carry out | 0011| the provisions and purposes of the Provider Service Network Act, | 0012| including contracts with independent contractors for the | 0013| performance of the association's administrative functions; | 0014| B. sue or be sued; | 0015| C. determine and pay the association's obligations, | 0016| including its obligation to pay claims or to provide alternative | 0017| health care services to public assistance recipients on behalf of | 0018| an insolvent or financially troubled provider service network; | 0019| D. borrow money to satisfy the association's | 0020| obligations; | 0021| E. assess association members in accordance with the | 0022| provisions of the Provider Service Network Act and make initial | 0023| and interim assessments as may be reasonable and necessary for | 0024| organizational or interim operating expenses. Interim expense | 0025| assessments shall be credited as offsets against any regular | 0001| assessments due following the close of the calendar year; | 0002| F. recoup expenditures on behalf of an insolvent or | 0003| financially troubled provider service network from that provider | 0004| service network or any other available source, including a | 0005| governmental agency, and be subrogated to that provider service | 0006| network's rights to payment to the extent of such expenditures; | 0007| G. employ or contract with appropriate legal, actuarial, | 0008| clerical and other personnel as necessary to provide assistance in | 0009| the operation of the association; | 0010| H. conduct periodic audits to assure the general | 0011| accuracy of the financial data submitted to the association. The | 0012| board shall cause the association to undergo an annual audit on a | 0013| calendar-year basis of its financial records and operations by an | 0014| independent certified public accountant; and | 0015| I. take all other actions, whether like or unlike the | 0016| foregoing, necessary or appropriate to carry out the board's or | 0017| the association's duties. | 0018| Section 7. [NEW MATERIAL] EXAMINATION.-- | 0019| A. The association is subject to and responsible to pay | 0020| the cost of examination by the superintendent of insurance on a | 0021| periodic basis, pursuant to Chapter 59A, Article 4 NMSA 1978. | 0022| B. Not later than March 31 of each year, the board shall | 0023| submit to the superintendent an audited financial report for the | 0024| preceding calendar year in a form approved by the superintendent. | 0025| Section 8. [NEW MATERIAL] ASSESSMENTS.-- | 0001| A. Following the end of each calendar year, the | 0002| association shall determine the association's unpaid expenses for | 0003| that year and estimated expenses for the following year, taking | 0004| into account existing unencumbered money and assets, investment | 0005| income and other appropriate gains and losses. | 0006| B. The secretary of human services shall report to the | 0007| board annually by March 31 the amounts paid each member for | 0008| services to public assistance recipients during the previous | 0009| calendar year. | 0010| C. The proportion of participation of each member shall | 0011| be determined annually by the board based on the secretary of | 0012| human services' report, together with members' annual statements | 0013| and other reports deemed necessary by the board. | 0014| D. The assessment for each member shall be determined by | 0015| multiplying the total unpaid and estimated expenses by a fraction, | 0016| the numerator of which equals the member's income from services to | 0017| public assistance recipients pursuant to Subsection D of Section 3 | 0018| of the Provider Service Network Act for the preceding calendar | 0019| year and the denominator of which equals the total of all such | 0020| income for all members in the state. The total of all assessments | 0021| in any calendar year shall not exceed five percent of the total | 0022| income of all members during the preceding calendar year from | 0023| contracts pursuant to Subsection D of Section 3 of the Provider | 0024| Service Network Act. | 0025| E. The board shall notify each member of the amount of | 0001| each regular assessment by May 15 of each year. The member shall | 0002| pay the assessment by June 15 of each year. If interim | 0003| assessments are necessary, the board shall notify each member of | 0004| the amounts due, which shall be paid within thirty days after the | 0005| date the notice is mailed or otherwise delivered. | 0006| F. The board may abate or defer, in whole or in part, | 0007| the assessment of a member if, in the opinion of the board, | 0008| payment of the assessment would endanger the ability of the member | 0009| to fulfill its contractual obligations. In the event an | 0010| assessment against a member is abated or deferred in whole or in | 0011| part, the amount by which such assessment is abated or deferred | 0012| may be assessed against the other members in a manner consistent | 0013| with the basis for assessments set forth in Subsection A of this | 0014| section. The member receiving the abatement or deferment shall | 0015| remain liable to the association for the deficiency for four | 0016| years. | 0017| G. If assessments exceed actual expenses in any year, | 0018| the excess shall be held at interest and used by the board to | 0019| offset future expenses. Any deficit incurred shall be recouped by | 0020| assessments apportioned among the association's members pursuant | 0021| to the assessment formula provided by Subsection D of this | 0022| section. | 0023| H. If it appears that the maximum assessment available, | 0024| together with unencumbered money and other assets, will be | 0025| insufficient in any year to make all necessary payments, the | 0001| association's obligations shall be paid pro rata. The unpaid | 0002| portion shall be paid as soon as additional assessment proceeds or | 0003| other assets become available. Notwithstanding the foregoing, the | 0004| association may pay its obligations in any order it deems | 0005| reasonable. | 0006| Section 9. [NEW MATERIAL] INITIAL ADMINISTRATIVE | 0007| ASSESSMENT.--Following the superintendent of insurance's approval | 0008| or adoption by rule of a plan of operation, the board shall impose | 0009| an initial assessment of five thousand dollars ($5,000) on each | 0010| member for each independent affiliated health care provider. New | 0011| members shall also be subject to an initial assessment on the same | 0012| basis. Proceeds of the initial assessment shall not be considered | 0013| as income to offset expenses for purposes of determining future | 0014| assessments. Regular assessments to establish and to operate the | 0015| association shall first be made after the end of the first | 0016| calendar year of operation. | 0017| Section 10. [NEW MATERIAL] NOTIFICATION TO PAY CLAIMS OR | 0018| PROVIDE SERVICES.-- | 0019| A. The association shall be liable to pay claims or to | 0020| provide alternative health care services for insolvent or | 0021| financially troubled members who are not fulfilling obligations to | 0022| provide such services to public assistance recipients under | 0023| contracts pursuant to Subsection D of Section 3 of the Provider | 0024| Service Network Act. The association's obligation shall commence | 0025| on the date the secretary of human services gives the association | 0001| notice that a member is failing, because of insolvency or | 0002| financial difficulties, to provide some or all of such services. | 0003| B. Nothing the Provider Service Network Act shall be | 0004| deemed to authorize or obligate the association to pay or | 0005| otherwise assume any obligation of a provider service network | 0006| prior to the date of notification, or any obligation thereafter | 0007| other than the obligation to provide services to public assistance | 0008| recipients under a contract pursuant to Subsection D of Section 3 | 0009| of the Provider Service Network Act. In no event shall the | 0010| association be liable to the creditors of a provider service | 0011| network. | 0012| Section 11. A new Section 59A-5-11.1 NMSA 1978 is enacted to | 0013| read: | 0014| "59A-5-11.1. [NEW MATERIAL] EXEMPTION FROM AUTHORITY | 0015| REQUIREMENT--PROVIDER SERVICE NETWORKS.--A certificate of | 0016| authority shall not be required of a provider service network, | 0017| except as provided in the Provider Service Network Act." | 0018|  |