Section 43.03 - Licensing(1)Application for Initial License. Any organization seeking licensure as an HMO under M.G.L. c. 176G must submit an application that contains at least the following information in a format specified by the Commissioner. (a)Internal Operations Plan.1. A copy of the basic organizational documents, such as articles of incorporation, articles of association, partnership agreement, trust agreement or any other applicable document establishing the HMO and all amendments thereto;2. A list of the Board of Directors or similar policy-making body, including the name, principal occupation and employer of each person;3. A copy of the by-laws, rules and regulations, or other similar document regulating the conduct of the applicant's internal affairs;4. A copy of the organizational chart with titles in the areas of marketing, administration, enrollment, grievance procedures, quality assurance, contract negotiation and financial matters;5. A narrative of the health care plan, facilities and personnel including, but not limited to, the organizational structure, a description of the service area and provider network, the roles, functions, responsibilities of, and interrelationships among providers and the methods of provider reimbursement and risk-sharing arrangements;6. An inventory of owned, operated, contracted and participating provider facilities including, but not limited to, hospitals, skilled nursing facilities, home health care and medical care services;7. For HMOs who manage their own health care facilities only, a legal opinion from the General Counsel of the Department of Public Health indicating whether the applicant has complied with the requirements of M.G.L. c. 111;8. A power of attorney authorizing the Commissioner to accept service of process for any legal actions commenced against an HMO not domiciled in the Commonwealth of Massachusetts; and9. For staff model HMOs only, an inventory of full-time equivalents of providers by specialty with physician to population ratios.(b)Utilization Plan.1. A statement of inpatient and outpatient utilization review measures; and2. statement of actuarial review and certification of actuarial assumptions made regarding utilization as applied to projected financial statements.(c)Quality Assurance. A detailed description of the quality assurance system or a certification that the description of the quality assurance system is included in an accompanying accreditation filing submitted under 211 CMR 52.00: Managed Care Consumer Protections and Accreditation of Carriers.(d)Marketing Plan. 1. A marketing plan describing the service area population and existing medical care utilization rates for inpatient and outpatient services in existing facilities in the service area;2. The anticipated enrollment for the HMO, and the service area population and utilization rates projected for health services delivered in the HMO's service area; and3. A statement of the size, organization, accountability and marketing methods of the marketing staff.(e)Member Services.1. A copy of the evidence of coverage for each different product to be offered or a certification that the evidences of coverage are included in an accompanying accreditation filing submitted under 211 CMR 52.00: Managed Care Consumer Protections and Accreditation of Carriers, and a description of the HMO's process for distributing such evidences of coverage to members;2. A plan for the yearly publication and distribution to members of rates, medical care service hours, location and telephone number(s) for normal service, and for emergency service;3. A map of the service area and a list of towns included;4. A copy of the provider directory or a certification that the provider directories are included in an accompanying accreditation filing submitted under 211 CMR 52.00: Managed Care Consumer Protections and Accreditation of Carriers, and a description of the process for distributing provider directories to members;5. A statement of the confidentiality procedures used to maintain member confidentiality involving medical records, grievances, quality assurance studies and contractual provisions in provider agreements;6. A detailed description of the formal internal grievance systems including procedures for the registration of grievances and procedures for resolution of grievances, with a descriptive summary of written grievances made in the areas of medical care and administrative services; and7. For renewal applications only, the total number and disposition of malpractice claims and other claims relating to the service or care rendered by the HMO made by, or on behalf of, members of the HMO that were settled or resulted in a judgment during the year by the HMO.(f)Contractual Arrangements. 1. A copy of the forms of group contracts or a certification that the group contracts are included in an accompanying accreditation filing submitted under 211 CMR 52.00: Managed Care Consumer Protections and Accreditation of Carriers;2. A copy of every contract form made or to be made between the applicant and any providers of health services or a certification that the contract forms are included in an accompanying accreditation filing submitted under 211 CMR 52.00: Managed Care Consumer Protections and Accreditation of Carriers;3. Administrative contracts including management and marketing contracts, and rental and leasing agreements;4. Written procedures for the prior review and approval by the HMO of provider subcontracts, including, but not limited to, the language requirements and other standards by which the HMO reviews the subcontracts;5. Written procedures by which the HMO maintains on file original signed provider contracts and copies of signed provider subcontracts; and6. For the purposes of 211 CMR 43.03(1)(f), "contract form" means a single copy of each generic contract used for each type of provider and not a copy of every contract signed between the HMO and provider.(g)Premium Rates. 1. Rates for all insured products offered, as applied to projected financial statements;2. A statement of the reasons for proposed rates and benefits, their effective dates and their marketing impact;3. A comparison of current rates, if applicable, and proposed rates, listing premium cost components as percentage of premium; and4. An explanation by the HMO's actuary supporting the actuarial assumptions and calculations utilized in the submission. The derivation of the rates must be clear and complete. All assumptions used must be stated and supported, and any mathematical factors used must be both defined and derived.(h)Financial Plan. 1. Audited financial reports, maintained and prepared in accordance with statutory accounting practices and procedures prescribed or permitted by the Commissioner, for at least the prior three fiscal years, if applicable, of the HMO's existence. Reports must be separate for HMOs operated as a line of business, division, department, subsidiary or affiliate as provided in M.G.L. c. 176G, § 3;2. Financial statements as listed in 211 CMR 43.03(1)(h)2.a. through f. which project the results of operations for the next three calendar years: b. statement of revenues and expenses;c. statement of changes in capital and surplus;e. capital expenditure; andf. repayment schedule for existing or anticipated loans or alternative financing arrangements. The projection for year one shall consist of actual results for quarters one and two, if available, as well as a projection for quarters three and four. The projections for years two and three shall be on an annual basis. The format shall be consistent with that specified for the quarterly reporting filings and unaudited annual reports required to be filed with the Commissioner pursuant to 211 CMR 43.04(2) and (3).
3. A statement indicating when the HMO estimates that enrollment income and other income from operations will equal expenses;4. Projections must be accompanied by detailed statements of underlying assumptions used and the bases thereof, including, but not limited to, projected premium rates and documentation as required for premium rates. If available, independent evaluations and assessment of these statements should also be included;5. A copy of the vote, or portion thereof, of the Board of Directors or governing body of the HMO designating the permissible forms of investments of HMO funds and any limitations thereon;6. Letters of financial support, credit, bond, or loan guarantee or other financial guarantee to the applicant;7. A detailed statement of the HMO's plan to establish and maintain reserves or other funds as determined necessary to cover any risks projected and not otherwise assumed by another entity, carrier or reinsurer; a detailed statement of current and projected reserve establishment calculations, amounts, purpose and use of reserve, and assumptions and bases thereof, including, but not limited to, identification of reserves set aside to meet uncovered reinsurance items;8. Plans for a surety bond or a deposit of cash or sureties in at least the same amount as a guarantee that the obligation to the members will be performed, unless waived as provided in M.G.L. c. 176G, § 15;9. Copies of all reinsurance, conversion or other agreements with other insurers, health providers, medical service corporations, hospital service corporations, governmental agencies or organizations or other HMOs to provide payment for the cost of, or to provide the contracted for health care services in the event the HMO is unable or ceases to provide contracted for health services for any reason;10. A copy of the HMO's official notification of status as a federally qualified HMO if it is so designated;11. A statement of insurance or funded self-insurance coverage for: a. protection against loss of property and liability of the HMO;b. worker's compensation to protect against claims arising from work-related injuries; andc. medical malpractice liability insurance of the HMO and providers;12. A listing of shareholders or members or other equity holders or members with holdings of 5% or more of capital shares, partnership interest or other evidence of equity holdings, by name, address, number and percentage of shares or other interest held and any other affiliations with the HMO;13. A listing of the applicant's legal, accounting and actuarial representatives by name and address;14. A statement of the plan's accounting system and organization, management and internal controls, method of estimating and handling incurred but not reported liabilities;15. A statement of fidelity bond coverage of all officers and employees entrusted with the handling of funds; and16. A detailed description of mechanisms to monitor the financial solvency of any independent practice association, group practice, or other organization contracting with the HMO that assumes substantial financial risk through capitation or other prepaid risk-sharing or risk-transferring arrangements, where substantial financial risk shall mean prepayments totaling more than 5% of an HMO's annual health care expense. [The following documents may be requested by the Commissioner, but need not be submitted unless such request is made:]
17. Current financial statements for guarantors of the HMO's contractual obligations;18. Current financial statements for persons or providers or corporate entities which have contracted with the HMO for the provision of medical, administrative, or marketing services, audited if available;19. A current financial statement of any person who holds a financial interest in the HMO; and20. Any additional information as deemed necessary by the Commissioner.(i)Evidence of Compliance with M.G.L. c. 176O and 211 CMR 52.00: Managed Care Consumer Protections and Accreditation of Carriers. Any HMO accredited by the Bureau of Managed Care shall be deemed to meet the utilization review requirements of M.G.L. c. 176O and 211 CMR 52.00.(j)Filing Fee. For initial applications, a filing fee in the amount of $1000 shall be required.(2)License Renewal. Any organization seeking relicensure as an HMO under M.G.L. c. 176G must submit an application for license renewal that contains at least the following information in a format specified by the Commissioner. (a)Filing Fee. For renewal applications, a filing fee in the amount of $1,000 shall be required.(b)Financial Plan. An annual report of financial information maintained and prepared in accordance with statutory accounting practices and procedures prescribed or permitted by the Commissioner, required by M.G.L. c. 176G, § 10 and 211 CMR 43.03(1)(h).(c)Evidence of Compliance with M.G.L. c. 176O and 211 CMR 52.00: Managed Care Consumer Protections and Accreditation of Carriers. Any HMO accredited by the Managed Care Bureau shall be deemed to meet the utilization review requirements of M.G.L. c. 176O and 211 CMR 52.00.(d)Material Changes to Initial License Application. 1. An HMO shall annually provide written notification to the Commissioner of any material change to the information that was submitted as part of the application for initial licensure according to 211 CMR 43.03(1).2. This information shall be in addition to the notification of any material changes that are subject to prior approval of the Commissioner as required by M.G.L. c. 176G, § 16 and 211 CMR 43.08. (e) Any additional information as deemed necessary by the Commissioner.(3)Review of Application. Upon receipt of a complete application, the Commissioner shall review the submitted material to determine whether a license shall be granted or renewed. The organization must demonstrate evidence of meeting all requirements set forth in M.G.L. c. 176G, M.G.L. c. 176O, 211 CMR 43.00, and 52.00: Managed Care Consumer Protections and Accreditation of Carriers including the following: (a) Corporate and organizational structure capable of supporting the benefits offered;(b) Compliance with requirements for determination of need and facilities licenses;(c) Power of authority authorizing Commissioner to accept service of process for any legal actions commenced against an HMO not domiciled in Massachusetts;(d) Contractual agreements that adequately protect the interests of members;(e) Utilization systems ensuring the appropriate and efficient use of health services;(f) Quality assurance systems monitoring the quality of care provided to members;(g) Operations financially capable of meeting the risk of providing health services; (h) Clear and logical plan for marketing of the HMO products;(i) Adequate provider networks to guarantee that all services contracted for will be accessible to members without delays detrimental to the health of members; and(j) Sufficient financial reserves or other resources to meet its financial obligations.(4)Approval of License. Each license issued under M.G.L. c. 176G and 211 CMR 43.00 shall remain in effect for 24 months unless revoked or suspended by the Commissioner. Renewal applications must be submitted by July 1st for a renewal date of January 1st of the subsequent year. The Division will notify all HMOs regarding the status of their HMO license renewals by November 1st of the year in which a timely application has been submitted.(5)Denial of License. If an application for a license is denied, the Commissioner shall notify the organization in writing, stating the reason(s) for the denial. The organization shall have the right to a hearing on its application within 45 days of its receipt of such notice by filing a written request for a hearing within 15 days of its receipt of such notice. Within 15 days after the conclusion of the hearing, the Commissioner shall either grant a license or shall notify the organization in writing of the denial of a license stating the reason(s) for the denial. The organization shall have the right to judicial review of the Commissioner's decision in accordance with the provisions of M.G.L. c. 30A, § 14.(6)Nonrenewal of License. If an application for a license renewal is denied, the Commissioner shall notify the organization in writing, stating the reason(s) for the nonrenewal. The organization shall have the right to a hearing on its application within 45 days of its receipt of such notice by filing a written request for a hearing within 15 days of its receipt of such notice. Within 15 days after the conclusion of the hearing, the Commissioner shall either renew the license or shall notify the organization in writing of the nonrenewal of a license stating the reason(s) for the nonrenewal. The organization shall have the right to judicial review of the Commissioner's decision in accordance with the provisions of M.G.L. c. 30A, § 14. During the period following the initial notice of nonrenewal, the HMO may be required to cease offering new business or may be placed under administrative supervision.(7)Administrative Supervision, Rehabilitation, Liquidation, or Revocation or Suspension of License.(a) The Commissioner may seek administrative supervision, rehabilitation or liquidation pursuant to M.G.L. c. 176G, §§ 20 or 20A or M.G.L. c. 175J, or revoke or suspend the license issued to the HMO under M.G.L. c. 176G, § 14 for a period not exceeding the unexpired terms thereof, if he or she finds, upon examination or other evidence submitted to him or her any of the following conditions: 1. The HMO is insolvent or is in an unsound condition;2. The HMO's business policies or methods are unsound or improper;3. The HMO's condition or management is such as to render its further transaction of business hazardous to the public or its members or creditors;4. The HMO is transacting business fraudulently;5. The HMO or its officers, representatives, affiliates or agents have refused to submit to an examination under M.G.L. c. 176G, § 10 or to perform any legal obligation relative thereto;6. The amount of the HMO's funds, net cash or contingent assets is deficient;7. The HMO has attempted or is attempting to compromise with its creditors on the ground that it is financially unable to pay its claims in full;8. The HMO has inadequately reserved for unearned premiums; or9. The HMO substantively fails to comply with the requirements of M.G.L. c. 176G, M.G.L. c. 175J, 211 CMR 43.00, or any other provision of law or regulation.(b) Before any 211 CMR 43.03(7) action is taken, the Commissioner shall notify the HMO in writing of his or her intention to take action and the date and place for a hearing on the matter.(c) Following the hearing, the Commissioner shall notify the HMO in writing of any decision regarding administrative supervision or the revocation or suspension of its license. The HMO has the right to judicial review of the Commissioner's decision in accordance with the provisions of M.G.L. c. 30A, § 14.(d) Notwithstanding 211 CMR 43.03(7)(b) and (c), if the Commissioner finds upon an examination or at any other time that: 1. an emergency exists requiring immediate action;2. if the HMO has given consent;3. the business of the HMO is being conducted fraudulently; or4. the HMO's condition renders the continuance of its business hazardous, as defined in M.G.L. c. 175J, § 3(C), to its policyholders or the general public, he or she may, without a hearing, order the suspension of the HMO's license pending further proceedings or place the HMO under administrative supervision as set forth in M.G.L. c. 175J.(e) Any revocation or suspension shall be conducted pursuant to M.G.L. c. 176G, § 20A.Amended by Mass Register Issue 1349, eff. 10/6/2017.