Health Maintenance Organizations

Ark. Code Ann. tit. 23, ch. 76

in effect

Ark. Code Ann. § 23-76-101 Purpose.

(a) The General Assembly determines that health maintenance organizations, when properly regulated, encourage methods of treatment and controls over the quality of care which effectively contain costs and provide for continuous health care by undertaking responsibility for the provision, availability, and accessibility of services. (b) For this reason, and because the primary responsibility of a health maintenance organization lies in providing quality healthcare services on a prepaid basis without regard to the type and number of services actually rendered, rather than providing indemnification against the cost of the services, the General Assembly finds it necessary to provide a statutory framework for the establishment and continuing regulation of health maintenance organizations which is separate from the insurance laws of this state, except as otherwise provided in this chapter.

Ark. Code Ann. § 23-76-102 Definitions.

As used in this chapter: (1) “Commissioner” means the Insurance Commissioner; (2) “Domestic corporation” means any corporation organized pursuant to the Arkansas Business Corporation Act, § 4-26-101 et seq., and the Arkansas Nonprofit Corporation Act, § 4-28-201 et seq.; (3) “Enrollee” means an individual who has been enrolled in a healthcare plan; (4) “Evidence of coverage” means any certificate, agreement, contract, identification card, or document issued to an enrollee setting out the coverage to which the enrollee is entitled; (5) “Healthcare plan” means any arrangement whereby any person undertakes to provide, arrange for, pay for, or reimburse any part of the cost of any healthcare services through an individually underwritten or group master contract, and at least part of the arrangement consists of arranging for, or the provision of, healthcare services as distinguished from mere indemnification against the cost of the services on a prepaid basis through insurance or otherwise; (6) “Healthcare services” means any services included in the furnishing to any individual of medical or dental care, or hospitalization, or services incident to the furnishing of care or hospitalization, as well as the furnishing to any person of all other services or goods for the purpose of preventing, alleviating, curing, or healing human illness or injury; (7) “Health maintenance organization” means any person which undertakes to provide or arrange for one (1) or more healthcare plans; (8) “Health professional” means physicians, dentists, optometrists, nurses, podiatrists, pharmacists, and other individuals engaged in the delivery of health services as are or may be designated under the Health Maintenance Organization Act of 1973 or any amendment thereto or regulation adopted thereunder; (9) “Person” means any natural or artificial person, including, but not limited to, individuals, partnerships, associations, trusts, or corporations; and (10) “Provider” means any person who is licensed in this state to furnish healthcare services as a health professional.

Ark. Code Ann. § 23-76-103 Applicability of Arkansas Insurance Code and laws concerning hospital and medical service corporations.

(a)(1) Except as otherwise provided in this chapter, provisions of the insurance law and provisions of hospital and medical service corporation laws shall not be applicable to any health maintenance organization granted a certificate of authority under this chapter. (2) Subdivision (a)(1) of this section shall not apply to an insurer or hospital and medical service corporation licensed and regulated pursuant to the insurance laws or the hospital and medical service corporation laws of this state, except with respect to its health maintenance organization activities authorized and regulated pursuant to this chapter. (b) The provisions of this chapter, the Arkansas Insurance Code, and the law concerning hospital and medical service corporations, § 23-75-101 et seq., shall not be applicable to any nonprofit vision service plan corporation composed of at least fifty (50) participating licensed optometrists or ophthalmologists licensed by the State of Arkansas to provide vision care services on a prepaid basis, when each licensed optometrist or ophthalmologist is subject to the rules of the professional's respective state board, and when each participating licensed optometrist or ophthalmologist agrees to assume responsibility for completion of the provisions of the vision care services contracted for, so that no element of risk is incurred by any subscriber group or person. (c) This chapter does not apply to a: (1) Healthcare sharing ministry as defined in § 23-60-104(b); (2) Direct healthcare agreement as defined in § 23-60-104(b); or (3) Nonprofit agricultural membership organization as defined in § 23-60-104.

Ark. Code Ann. § 23-76-104 Arkansas Insurance Code sections applicable to health maintenance organizations.

(a) Except to the extent that the Insurance Commissioner determines that the nature of health maintenance organizations, healthcare plans, and evidences of coverage render such sections clearly inappropriate, the following sections are applicable to health maintenance organizations: (1) Sections 23-60-101 — 23-60-108 and 23-60-110, referring to scope of the Arkansas Insurance Code; (2) Section 23-61-101 et seq., § 23-61-201 et seq., and § 23-61-301 et seq., referring to the Insurance Commissioner; (3) Sections 23-63-102 — 23-63-104, § 23-63-201 et seq., general provisions, and § 23-63-301 et seq., referring to service of process, a registered agent as process agent, serving legal process, and time to plead; (4) Section 23-63-601 et seq., referring to assets and liabilities, and § 23-63-901 et seq., referring to administration of deposits; (5) Section 23-63-1501 et seq., referring to risk-based capital requirements; (6) Section 23-64-101 et seq., § 23-64-201 et seq., and § 23-64-501 et seq., referring to agents, brokers, solicitors, and adjusters; (7) The Trade Practices Act, § 23-66-201 et seq.; §§ 23-66-301 — 23-66-306 and 23-66-308 — 23-66-314; and § 23-66-501 et seq., referring to trade practices and frauds; (8) Section 23-68-101 et seq., referring to rehabilitation and liquidation; (9) Section 23-69-134, referring to home office and records and the penalty for unlawful removal of records; (10) Section 23-69-156, referring to extinguishing unused corporate charters; (11) Sections 23-75-104, 23-75-105, and 23-75-116, referring to hospital and medical service corporations; (12) Sections 23-79-101 — 23-79-107, 23-79-109 — 23-79-128, 23-79-131 — 23-79-134, and 23-79-202 — 23-79-210, referring to insurance contracts; (13) Sections 23-85-101 — 23-85-132, 23-85-134, and 23-85-136, referring to individual accident and health insurance; (14) Sections 23-86-101 — 23-86-104, 23-86-106, 23-86-108 — 23-86-111, 23-86-113 — 23-86-117, 23-86-119, 23-86-120, § 23-86-201 et seq., § 23-86-301 et seq., and § 23-86-401 et seq., referring to blanket and group accident and health insurance; (15) Section 23-99-201 et seq., § 23-99-301 et seq., § 23-99-401 et seq., § 23-99-501 et seq., § 23-99-601 et seq., and § 23-99-701 et seq., referring to healthcare providers; (16) Section 23-64-515, referring to notice of termination of appointment; and (17) The Arkansas Life and Health Insurance Guaranty Association Act, § 23-96-101 et seq., referring to the Arkansas Life and Health Insurance Guaranty Association. (b)(1) A health maintenance organization domiciled or applying to be domiciled in this state may elect to be subject to the Insurance Holding Company Regulatory Act, § 23-63-501 et seq., by: (A) Written notice in its application at the time the health maintenance organization applies to be domiciled in Arkansas; or (B) Providing thirty (30) days' prior written notice to the commissioner if the health maintenance organization was domiciled in Arkansas on March 22, 2007. (2) An election under this subsection: (A) Shall not be revoked; (B) Requires that if a modification is required to be reported or filed under the Insurance Holding Company Regulatory Act, § 23-63-501 et seq., the health maintenance organization shall comply with the provisions concerning notice of major modifications to the operation of the health maintenance organization under the Insurance Holding Company Regulatory Act, § 23-63-501 et seq., instead of the provisions concerning notice of major modifications to the operation of the health maintenance organization under § 23-76-107(d); and (C) Does not affect the duty of a health maintenance organization to make any other filing required under § 23-76-107(d) that is not required by the Insurance Holding Company Regulatory Act, § 23-63-501 et seq. (c) If a health maintenance organization does not elect to be subject to the Insurance Holding Company Regulatory Act, § 23-63-501 et seq., it shall be subject to § 23-69-142 regarding mergers, consolidations, and acquisitions.

Ark. Code Ann. § 23-76-105 Penalties — Enforcement.

(a) In lieu of suspension or revocation of a certificate of authority under § 23-76-123, the Insurance Commissioner may levy an administration penalty in an amount not less than two hundred fifty dollars ($250), nor more than two thousand five hundred dollars ($2,500), if reasonable notice in writing is given of the intent to levy the penalty and the health maintenance organization has a reasonable time within which to remedy the defect in its operations which gave rise to the penalty citation. The commissioner may augment this penalty by an amount equal to the sum that he or she calculates to be the damages suffered by the enrollees or other members of the public. (b) Any person who willfully violates this chapter shall be guilty of a Class A misdemeanor. (c)(1) If the commissioner shall for any reason have cause to believe that any violation of this chapter has occurred or is threatened, the commissioner may give notice to the health maintenance organization and to the representatives, or other persons who appear to be involved in the suspected violation, to arrange a conference with the alleged violators or their authorized representatives for the purpose of attempting to ascertain the facts relating to the suspected violation and, in the event it appears that any violation has occurred or is threatened, to arrive at an adequate and effective means of correcting or preventing the violations. (2) Proceedings under this subsection shall not be governed by formal procedural requirements and may be conducted in the manner the commissioner deems appropriate under the circumstances. (d)(1) The commissioner may issue an order directing a health maintenance organization or a representative of a health maintenance organization to cease and desist from engaging in any act or practice in violation of the provisions of this chapter. (2) Within thirty (30) days after service of the order of cease and desist, the respondent may request a hearing on the questions of whether acts or practices in violation of this chapter have occurred. The hearings shall be conducted pursuant to the provisions of §§ 23-61-303 — 23-61-307, and judicial review shall be available as provided in § 23-66-212. (e) In the case of any violation of the provisions of this chapter, if the commissioner elects not to issue a cease and desist order or in the event of noncompliance with a cease and desist order issued pursuant to subsection (d) of this section, the commissioner may institute a proceeding to obtain injunctive relief or, seeking other appropriate relief, in Pulaski County Circuit Court for actions of this nature.

Ark. Code Ann. § 23-76-106 License to practice, sell, or dispense required.

No person shall perform any of the services or procedures or sell or dispense any goods or devices in the field of the healing arts for which a license is required under the laws of the State of Arkansas unless the person holds a valid license authorizing him or her to perform the procedures, render the services, or sell or dispense the goods or devices.

Ark. Code Ann. § 23-76-107 Establishment.

(a)(1) Any person that meets the requirements of § 23-76-102(9) may apply to the Insurance Commissioner for and obtain a certificate of authority to establish and operate a health maintenance organization. (2) No person shall establish or operate a health maintenance organization in this state, nor sell or offer to sell, nor solicit offers to purchase or receive advance or periodic consideration in conjunction with a health maintenance organization without obtaining a certificate of authority under this chapter. (3) The corporation must have the express authority to operate a health maintenance organization contained in its articles of incorporation. Incorporation shall not be required of any entity that has been issued a certificate of authority prior to March 30, 1987. (b)(1) Every health maintenance organization, as of July 9, 1975, shall submit an application for a certificate of authority under subsection (c) of this section within sixty (60) days of July 9, 1975. (2) Each applicant may continue to operate until the commissioner acts upon the application. (3) In the event that an application is denied under § 23-76-108, the applicant shall henceforth be treated as a health maintenance organization whose certificate of authority has been revoked. (c) Each application for a certificate of authority shall be verified by an officer or authorized representative of the applicant, shall be in a form prescribed by the commissioner, and shall set forth or be accompanied by the following: (1) A copy of the basic organizational document, if any, of the applicant, such as the articles of incorporation, articles of association, partnership agreement, trust agreement, or other applicable documents, and all amendments thereto; (2) A copy of the bylaws, rules, or similar document, if any, regulating the conduct of the internal affairs of the applicant; (3) A list of the names, addresses, and official positions of the persons who are to be responsible for the conduct of the affairs of the applicant, including all members of the board of directors, board of trustees, executive committee, or other governing board or committee, the principal officers in the case of a corporation, and the partners or members in the case of a partnership or association; (4) A copy of any contract made or to be made between any providers or persons listed in subdivision (c)(3) of this section and the applicant; (5) A statement generally describing the health maintenance organization, its healthcare plans, facilities, and personnel; (6) A copy of the form of evidence of coverage to be issued to the enrollees; (7) A copy of the form of the group contract, if any, that is to be issued to employers, unions, trustees, or other organizations; (8)(A) Financial statements showing the applicant's assets, liabilities, and sources of financial support. (B) If the applicant's financial affairs are audited by independent certified public accountants, a copy of the applicant's most recent regular certified financial statement shall be deemed to satisfy this requirement unless the commissioner directs that additional or more recent financial information is required for the proper administration of this chapter; (9) A financial feasibility plan that includes: (A) Detailed enrollment projections; (B) The methodology for determining premium rates to be charged during the first twelve (12) months of operation certified by an actuary or other qualified person; (C) A projection of balance sheets; (D) Cash flow statements showing any capital expenditures, purchase and sale of investments and deposits with the state, and income and expense statements anticipated from the start of operations until the health maintenance organization has had net income for at least one (1) year; and (E) A statement as to the source of working capital as well as any other sources of funds; (10)(A) On and after January 1, 2003, a power of attorney executed by the applicant, if not domiciled in this state, and filed, along with a proper fee specified by the commissioner, with the commissioner's office to register an Arkansas resident to serve as the true and lawful attorney of the applicant in and for this state upon whom may be served all lawful process in any legal action or proceeding against the health maintenance organization on a cause of action arising in this state. (B) In the event no registered agent has been chosen, the commissioner may be served until the appointment of an Arkansas-registered agent for service of process has been entered upon the records of the commissioner; (11) A statement or map reasonably describing the geographic areas to be served; (12) A description of the complaint procedures to be utilized as required under § 23-76-116; (13) A description of the procedures and programs to be implemented to meet the quality of healthcare requirements in § 23-76-108; (14) A description of the mechanism by which enrollees will be afforded an opportunity to participate in matters of policy and operation under § 23-76-110(b); (15) A list of the names and addresses of all providers with which the health maintenance organization has agreements; and (16) Such other information as the commissioner may require to make the determinations required in § 23-76-108. (d)(1) A health maintenance organization shall file a notice describing any major modification of the operation set out in the information required by subsection (c) of this section unless otherwise provided for in this chapter. The notice shall be filed with the commissioner prior to the modification. If the commissioner does not disapprove within sixty (60) days of filing, the modification shall be deemed approved. (2) The commissioner shall promulgate rules exempting from the filing requirements of subdivision (c)(1) of this section those items the commissioner deems unnecessary.

Ark. Code Ann. § 23-76-109 Powers — Definition.

(a) The powers of a health maintenance organization include, but are not limited to, the following: (1) The purchase, lease, construction, renovation, operation, or maintenance of hospitals, medical facilities, or both, and their ancillary equipment, and the property as may reasonably be required for its principal office or for other purposes as may be necessary in the transaction of the business of the health maintenance organization; (2) The making of loans to a medical group under contract with it in furtherance of its program or the making of loans to a corporation or corporations under its control for the purpose of acquiring or constructing medical facilities and hospitals or in furtherance of a program providing healthcare services to enrollees; (3) The furnishing of healthcare services through providers which are under contract with the health maintenance organization; (4) The contracting with any person for the performance on its behalf of certain functions such as marketing, enrollment, and administration; (5) The contracting with an insurance company licensed in this state, or with a hospital or medical service corporation authorized to do business in this state, for the provision of insurance, indemnity, or reimbursement against the cost of healthcare services provided by the health maintenance organization; (6) The offering, in addition to basic healthcare services, of: (A) Additional healthcare services; (B) Indemnity benefits covering out-of-area or emergency services, and special services not provided on a direct service basis; and (C)(i) Indemnity benefits on a point-of-service basis within such limits as may be prescribed by the Insurance Commissioner. (ii) As used in this section, the term “point-of-service” means indemnifying or paying on behalf of an enrollee for covered healthcare services on a nonemergency, self-referred basis obtained from providers who are not employed by, under contract with, or otherwise affiliated with, the health maintenance organization, or services obtained from providers affiliated with the health maintenance organization without proper referrals; and (7) The contracting with providers located out of state who are properly licensed to render medical care in the jurisdiction in which such a provider is located. (b)(1)(A) A health maintenance organization shall file notice, with adequate supporting information, with the commissioner prior to each exercise of any power granted in subdivision (a)(1) or subdivision (a)(2) of this section. (B) The commissioner shall disapprove the exercise of power if in his or her opinion it would substantially and adversely affect the financial soundness of the health maintenance organization and endanger its ability to meet its obligations. (C) If the commissioner does not disapprove within sixty (60) days of the filing, the exercise of power shall be deemed approved. (2) The commissioner may promulgate rules exempting from the filing requirement of subdivision (b)(1) of this section those activities having a de minimis effect.

Ark. Code Ann. § 23-76-110 Advisory board.

(a) The advisory board of any health maintenance organization shall include at least one (1) physician, one (1) dentist, one (1) pharmacist, one (1) nurse, one (1) consumer, and one (1) enrollee. (b) The advisory board shall establish a mechanism to afford the enrollees an opportunity to participate in matters of policy and operation through the establishment of advisory panels, by the use of advisory referenda on major policy decisions, or through the use of other mechanisms. (c) The advisory board shall not be deemed to be the governing body of the health maintenance organization licensed under this chapter.

Ark. Code Ann. § 23-76-111 Fiduciary responsibilities of director, officer, or partner.

(a) Any director, officer, or partner of a health maintenance organization who receives, collects, disburses, or invests funds in connection with the activities of the health maintenance organization shall be responsible for the funds in a fiduciary relationship to the enrollees. (b) A health maintenance organization shall maintain in force a fidelity bond or fidelity insurance on these employees, officers, directors, and partners in an amount not less than two hundred fifty thousand dollars ($250,000) for each health maintenance organization or a maximum of five million dollars ($5,000,000) in aggregate maintained on behalf of health maintenance organizations owned by a common parent corporation, or the sum prescribed by the Insurance Commissioner.

Ark. Code Ann. § 23-76-112 Evidence of coverage and charges for healthcare services.

(a)(1)(A) Every enrollee residing in this state is entitled to evidence of coverage under a healthcare plan. (B) If the enrollee obtains coverage under a healthcare plan through an insurance policy or a contract issued by a hospital and medical service corporation, whether by option or otherwise, the insurer or the hospital and medical service corporation shall issue the evidence of coverage. Otherwise, the health maintenance organization shall issue the evidence of coverage. (2) No evidence of coverage, or amendment thereto, shall be issued or delivered to any person in this state until a copy of the form of the evidence of coverage, or amendment thereto, has been filed with and approved by the Insurance Commissioner. (3) An evidence of coverage shall contain: (A) No provisions or statements that: (i) Are unjust, unfair, inequitable, misleading, or deceptive; (ii) Encourage misrepresentation; or (iii) Are untrue, misleading, or deceptive as defined in § 23-76-119; and (B) A clear and complete statement if a contract, or a reasonably complete summary if a certificate, of: (i) The healthcare services and the insurance or other benefits, if any, to which the enrollee is entitled under the healthcare plan; (ii) Any limitations on the services, kind of services, benefits, or kind of benefits, to be provided, including any deductible or copayment feature; (iii) Where and in what manner information is available as to how services may be obtained; (iv) The total amount of payment for healthcare services and the indemnity or service benefits, if any, that the enrollee is obligated to pay with respect to individual contracts, or an indication whether the plan is contributory or noncontributory with respect to group certificates; and (v) A clear and understandable description of the health maintenance organization's method for resolving enrollee complaints. Any subsequent change may be evidenced in a separate document issued to the enrollee. (4) A copy of the form of the evidence of coverage to be used in this state, and any amendment thereto, shall be subject to the filing and approval requirements of subdivision (a)(2) of this section unless it is subject to the jurisdiction of the commissioner under the laws governing health insurance or hospital or medical service corporations in which event the filing and approval provisions of the laws shall apply. However, to the extent that the provisions do not apply, the requirements in subdivision (a)(3) of this section shall be applicable. (b)(1) No schedule of charges for enrollee coverage for healthcare services, or amendment thereto, may be used in conjunction with any healthcare plan until either a copy of the schedule or the methodology for determining charges has been filed with and approved by the commissioner. (2)(A) Either a specific schedule of charges or a methodology for determining charges shall be established in accordance with the actuarial principles for various categories of enrollees, provided that charges applicable to an individual enrollee in a group contract shall not be individually determined based on the status of the enrollee's health. However, the charges shall not be excessive, inadequate, or unfairly discriminatory. (B) A certification by a qualified actuary, to the appropriateness of the use of the methodology, based on reasonable assumptions, shall accompany the filing along with adequate supporting information. (c)(1)(A) Within a reasonable period, the commissioner shall approve any form if the requirements of subsection (a) of this section are met and any schedule of charges or methodology for determining charges if the requirements of subsection (b) of this section are met. (B) It shall be unlawful to issue the form or to use the schedule of charges or methodology for determining charges until approved. (2)(A)(i) If the commissioner disapproves the filing, he or she shall notify the filer promptly. (ii) In the notice, the commissioner shall specify the reasons for disapproval and the findings of fact and conclusion that support the reasons. (B) A hearing will be granted by the commissioner within sixty (60) days after a request in writing by the person filing. (C) If the commissioner does not disapprove any form or schedule of charges within sixty (60) days of the filing of the forms or charges, they shall be deemed approved. (3)(A) If the commissioner disapproves any form or schedule of charges or methodology for determining charges, the commissioner's disapproval and the findings of fact and conclusions that support the commissioner's reasons shall be subject to judicial review pursuant to § 23-61-307. (B) The review shall be upon the entire record, and the commissioner's decision shall be sustained if it is supported by the preponderance of the evidence in the record. (d) The commissioner may require the submission of whatever relevant information he or she deems necessary in determining whether to approve or disapprove a filing made pursuant to this section.

Ark. Code Ann. § 23-76-113 Annual report and quarterly report.

(a) A health maintenance organization shall annually on or before March 1 file a report verified by at least two (2) principal officers with the Insurance Commissioner covering the preceding calendar year. (b)(1) The report shall be on forms prescribed by the commissioner. (2) For the report to be filed March 1, 2002, and annually thereafter, the annual report prescribed by the commissioner shall be the current edition published by the National Association of Insurance Commissioners of the Annual Statement Blank For Health, that shall be prepared in accordance with the National Association of Insurance Commissioners' Annual Statement Instructions For Health and shall follow those accounting practices and procedures prescribed and published in the current edition of the National Association of Insurance Commissioners' Accounting Practices and Procedures Manual. (3) Each authorized health maintenance organization shall furnish all information as called for by the National Association of Insurance Commissioners' Annual Statement Blank For Health. Further, it shall be verified by oath or affirmation of the health maintenance organization's president or vice president and secretary or actuary. (4) The commissioner shall furnish to each domestic health maintenance organization two (2) copies of the forms on which the annual statement is to be made. (5) The annual report shall include: (A) An annual audited financial report certified by an independent certified public accountant; (B) Any material changes in the information submitted pursuant to § 23-76-107(c); (C) The number of persons enrolled during the year, the number of enrollees as of the end of the year, and the number of enrollments terminated during the year; (D) A summary of information compiled pursuant to § 23-76-108 in the form required by the commissioner; and (E) Any other information on an annual, quarterly, or more frequent basis as the commissioner shall prescribe, relating to the performance of the health maintenance organization, that is necessary to enable the commissioner to carry out his or her duties under this chapter. (c) Any health maintenance organization that fails to file the annual, quarterly, or any required financial or other report when due may be subject to a penalty of one hundred dollars ($100) for each day of delinquency in the commissioner's discretion, or unless the penalty is waived by the commissioner upon a showing of good cause by the health maintenance organization. (d)(1)(A) Beginning on and after January 1, 2000, each authorized health maintenance organization shall prepare and file with the commissioner a quarterly financial report on forms and at such times as shall be prescribed by the commissioner. (B) For the reports to be filed January 1, 2002, and quarterly reports thereafter, the quarterly financial report shall be the current edition, published by the National Association of Insurance Commissioners, of the Quarterly Statement Blank For Health, that shall be prepared in accordance with the National Association of Insurance Commissioners' Quarterly Statement Instructions For Health and shall follow those accounting procedures and practices prescribed by the National Association of Insurance Commissioners' Accounting Practices And Procedures Manual. (2) The quarterly statement shall be verified by the officers of the health maintenance organization as required by the current edition, published by the National Association of Insurance Commissioners, of the quarterly statement instructions as a companion to the reporting form prescribed by the commissioner.

Ark. Code Ann. § 23-76-114 Information to enrollees.

(a) A health maintenance organization shall make available to its subscribers a list of providers upon enrollment and re-enrollment. (b) Every health maintenance organization shall provide within thirty (30) days to its subscribers a notice of any material change in the operation of the health maintenance organization, including any major change in its provider network, that will affect them directly. (c)(1) An enrollee shall be notified in writing by the health maintenance organization of the termination of the primary care provider who provided healthcare services to that enrollee. (2) The health maintenance organization shall provide assistance to the enrollee in transferring to another participating primary care provider. (d) The health maintenance organization shall provide to subscribers information on how services may be obtained, where additional information on access to services can be obtained, and a telephone number where the enrollee can contact the health maintenance organization, at no cost to the enrollee.

Ark. Code Ann. § 23-76-115 Open enrollment.

(a)(1) After a health maintenance organization has been in operation twenty-four (24) months, it shall have an annual open enrollment period of at least one (1) month during which it accepts enrollees up to the limits of its capacity, as determined by the health maintenance organization, in the order in which they apply for enrollment. (2) A health maintenance organization may apply to the Insurance Commissioner for authorization to impose such underwriting restrictions upon enrollment as are necessary to preserve its financial stability, to prevent excessive adverse selection by prospective enrollees, or to avoid unreasonably high or unmarketable charges for enrollee coverage for healthcare services. (3) The commissioner shall approve or deny the application within sixty (60) days of its receipt from the health maintenance organization. (b) Health maintenance organizations providing or arranging for services on a group contract basis may limit the open enrollment provided for in subsection (a) of this section to all members of the groups covered by the contracts.

Ark. Code Ann. § 23-76-116 Complaint system.

(a)(1) Every health maintenance organization shall establish and maintain a complaint system that has been approved by the Insurance Commissioner to provide reasonable procedures for the resolution of written complaints initiated by enrollees concerning healthcare services. (2) Each health maintenance organization shall submit to the commissioner an annual report in a form prescribed by the commissioner that shall include: (A) A description of the procedures of the complaint system; (B) The total number of complaints handled through the complaint system and a compilation of causes underlying the complaints filed; and (C) The number, amount, and disposition of malpractice claims settled during the year by the health maintenance organization. (b)(1) The health maintenance organization shall maintain records of written complaints filed with it concerning issues and persons other than healthcare services and shall submit to the commissioner a summary report at such times and in such format as the commissioner may require. (2) Complaints involving other persons shall be referred to the persons with a copy to the commissioner. (c) The commissioner may examine the complaint system, subject to the limitation concerning medical records of individuals set forth in § 23-76-122(c).

Ark. Code Ann. § 23-76-117 Investments.

With the exception of investments made in accordance with § 23-76-109(a)(1) and (2) and § 23-76-109(b) , the investable funds of a health maintenance organization shall be invested only in securities or other investments permitted by the laws of this state for the investment of assets constituting the legal reserves of life insurance companies or other securities or investments as the Insurance Commissioner may permit.

Ark. Code Ann. § 23-76-119 Prohibited practices — Definition.

(a) No health maintenance organization, or representative thereof, may knowingly cause or knowingly permit the use of advertising that is untrue or misleading, solicitation that is untrue or misleading, or any form of evidence of coverage that is deceptive. For purposes of this chapter: (1) A statement or item of information shall be deemed to be untrue if it does not conform to fact in any respect that is or may be significant to an enrollee of, or person considering enrollment in, a healthcare plan; (2) A statement or item of information shall be deemed to be misleading, whether or not it may be literally untrue, if, in the total context in which the statement is made or the item of information is communicated, the statement or item of information may be reasonably understood by a reasonable person, not possessing special knowledge regarding healthcare coverage, as indicating any benefit or advantage or the absence of any exclusion, limitation, or disadvantage of possible significance to an enrollee of, or person considering enrollment in, a healthcare plan, if the benefit or advantage or absence of limitation, exclusion, or disadvantage does not in fact exist; and (3) An evidence of coverage shall be deemed to be deceptive if the evidence of coverage taken as a whole, and with consideration given to typography and format, as well as language, shall be such as to cause a reasonable person, not possessing special knowledge regarding healthcare plans and evidences of coverage therefor, to expect benefits, services, charges, or other advantages that the evidence of coverage does not provide or that the healthcare plan issuing the evidence of coverage does not regularly make available for enrollees covered under such evidence of coverage. (b) An enrollee may not be cancelled or nonrenewed except for the failure to pay the charge for the coverage or for such other reasons as may be promulgated by the Insurance Commissioner. (c) Hold Harmless. (1) Every contract between a health maintenance organization and a participating provider of healthcare services shall be in writing and shall set forth that in the event the health maintenance organization fails to pay for healthcare services as set forth in the contract, the subscriber or enrollee shall not be liable to the provider for any sums owed by the health maintenance organization. (2) In the event that the participating provider contract has not been reduced to writing as required by this subsection or that the contract fails to contain the required prohibition, the participating provider shall not collect or attempt to collect from the subscriber or enrollee sums owed by the health maintenance organization. (3)(A) No participating provider or the provider's agent, trustee, or assignee may maintain an action at law against a subscriber or enrollee to collect sums owed to them by the health maintenance organization nor shall they make any statement, either written or oral, to any subscriber or enrollee that makes demand for, or would lead a reasonable person to believe that a demand is being made for, payment of any amounts owed by the health maintenance organization. (B)(i) If a participating provider has a pattern or practice of violating this subsection and continues to violate this subsection after the commissioner has issued a written warning to the participating provider, the commissioner may levy a penalty in an amount not less than one hundred fifty dollars ($150) nor more than one thousand five hundred dollars ($1,500). (ii) Before imposing the penalty, the commissioner shall send a written notice to the participating provider informing the provider of the right to a hearing pursuant to §§ 23-61-303 — 23-61-307. (4) “Participating provider” means a “provider” as defined in § 23-76-102(10) who, under an express or implied contract with the health maintenance organization or with its contractor or subcontractor, has agreed to provide healthcare services to enrollees with an expectation of receiving payment, other than copayment or deductible, directly or indirectly, from the health maintenance organization. (d)(1) A health maintenance organization or its contractor or subcontractor may pay a claim for healthcare services by any lawful method, including the alternative payment method by gift card, credit card, or other type of electronic payment or virtual credit card as payment if the healthcare provider is given clear instructions about how to select the alternative payment method. (2) However, a health maintenance organization or its contractor or subcontractor is prohibited from requiring a participating provider to accept a gift card, credit card, or other type of electronic payment or virtual credit card as payment of a claim for healthcare services if the method of payment charges the participating provider a service fee to process.

Ark. Code Ann. § 23-76-120 Regulation of agents — Definition.

(a) After notice and hearing, the Insurance Commissioner may promulgate such reasonable rules as are necessary to provide for the licensing of agents. (b) “Agent” means a person directly or indirectly associated with a healthcare plan who engages in solicitation or enrollment.

Ark. Code Ann. § 23-76-121 Powers of insurers and hospital and medical service corporations.

(a) An insurance company licensed in this state, or a hospital or medical service corporation authorized to do business in this state, may either directly, or through a subsidiary or affiliate, organize and operate a health maintenance organization under the provisions of this chapter. (b)(1) Notwithstanding any provision of the Hospital and Medical Service Corporations Act, § 23-75-101 et seq., an insurer or a hospital and medical service corporation may contract with a health maintenance organization to provide insurance or similar protection against the cost of care provided through health maintenance organizations and to provide coverage in the event of the failure of the health maintenance organization to meet its obligations. (2) The enrollees of a health maintenance organization constitute a permissible group under such laws. (3) Among other things, under the contracts, the insurer or hospital or medical service corporation may make benefit payments to health maintenance organizations for healthcare services rendered by providers pursuant to the healthcare plan.

Ark. Code Ann. § 23-76-122 Examinations.

(a) The Insurance Commissioner may make an examination of the affairs of any health maintenance organization as often as he or she deems it necessary for the protection of the interests of the people of this state but not less frequently than one (1) time every five (5) years. (b) The commissioner may make an examination concerning the quality of healthcare services of any health maintenance organization as often as he or she deems it necessary for the protection of the interests of the people of this state but not less frequently than one (1) time every five (5) years. (c)(1) Every health maintenance organization shall submit its books and records relating to the healthcare plan to the examinations and in every way facilitate them. (2) For the purpose of examinations, the commissioner may administer oaths to and examine the officers and agents of the health maintenance organization. (3) Medical records of individuals and records of physicians and hospitals providing services under a contract to the health maintenance organization shall be subject to the examination. (d) The expenses of examinations under this section shall be assessed against the health maintenance organization being examined and remitted to the commissioner. (e) In lieu of the examination, the commissioner may accept the report of an examination made by the insurance commissioner of another state or director of the department of health of another state. (f)(1) Any examination under this section that is to commence within one (1) year prior to the date a health maintenance organization shall cease to provide healthcare services in this state, may be reduced in scope or waived in its entirety, upon application of the health maintenance organization and approval of the commissioner. (2) The commissioner shall consider the following in determining whether a full or partial waiver may be granted: (A) Claims payment history; (B) Consumer complaint history; and (C) Financial condition . (3) Any health maintenance organization requesting a waiver of an examination shall continue to comply with § 23-76-118 until such time as it is no longer providing healthcare services in this state.

Ark. Code Ann. § 23-76-123 Suspension or revocation of certificate of authority.

(a) The Insurance Commissioner may suspend or revoke any certificate of authority issued to a health maintenance organization under this chapter if the commissioner finds that any of the following conditions exist: (1) The health maintenance organization is operating in contravention of its basic organizational document, its healthcare plan, or in a manner contrary to that described in and reasonably inferred from any other information submitted under § 23-76-107, unless amendments to the submissions have been filed with and approved by the commissioner; (2) The health maintenance organization issues evidence of coverage or uses a schedule of charges for healthcare services which do not comply with the requirements of § 23-76-112; (3) The healthcare plan does not provide or arrange for basic healthcare services; (4) The health maintenance organization: (A) Does not meet the requirements of § 23-76-108; or (B) Is unable to fulfill its obligations to furnish healthcare services as required under its healthcare plan; (5) The health maintenance organization is no longer financially responsible and may reasonably be expected to be unable to meet its obligations to enrollees or prospective enrollees; (6) The health maintenance organization has failed to implement a mechanism affording the enrollees an opportunity to participate in matters of policy and operation under § 23-76-110; (7) The health maintenance organization has failed to implement the complaint system required by § 23-76-116 in a manner to reasonably resolve valid complaints; (8) The health maintenance organization, or any person on its behalf, has advertised or merchandised its services in an untrue, misrepresentative, misleading, deceptive, or unfair manner; (9) The continued operation of the health maintenance organization would be hazardous to its enrollees; or (10) The health maintenance organization has otherwise failed to substantially comply with this chapter. (b) A certificate of authority shall be suspended or revoked only after compliance with the requirements of § 23-76-126. (c) When the certificate of authority of a health maintenance organization is suspended, during the period of the suspension the health maintenance organization shall not: (1) Enroll any additional enrollees except newborn children or other newly acquired dependents of existing enrollees; and (2) Engage in any advertising or solicitation whatsoever. (d)(1) When the certificate of authority of a health maintenance organization is revoked, the health maintenance organization shall: (A) Proceed to wind up its affairs immediately following the effective date of the order of revocation; (B) Conduct no further business except as may be essential to the orderly conclusion of the affairs of the health maintenance organization; and (C) Engage in no further advertising or solicitation whatsoever. (2) By written order, the commissioner may permit the further operation of the health maintenance 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 healthcare coverage.

Ark. Code Ann. § 23-76-124 Rehabilitation, liquidation, or conservation of health maintenance organization.

(a) Any rehabilitation, liquidation, or conservation of a health maintenance organization shall be deemed to be the rehabilitation, liquidation, or conservation of an insurance company and shall be conducted under the supervision of the Insurance Commissioner pursuant to the law governing the rehabilitation, liquidation, or conservation of insurance companies. (b) The commissioner may apply for an order directing him or her to rehabilitate, liquidate, or conserve a health maintenance organization upon any one (1) or more grounds set out in § 23-68-107 or when in his or her opinion the continued operation of the health maintenance organization would be hazardous either to the enrollees or to the people of this state.

Ark. Code Ann. § 23-76-125 Rules.

(a) After notice and hearing, the Insurance Commissioner may promulgate reasonable rules, not inconsistent with existing statutes of this state, as are necessary or proper to carry out the provisions of this chapter. (b) The rules shall be subject to review in accordance with § 23-61-307.

Ark. Code Ann. § 23-76-126 Administrative proceedings.

(a)(1) If the Insurance Commissioner has cause to believe that grounds for the suspension or revocation of a certificate of authority exist, the commissioner shall: (A) Notify the health maintenance organization in writing of the grounds for suspension or revocation of the certificate of authority; and (B) Schedule a hearing on the matter at least twenty (20) days after giving written notice of the hearing. (2) After the hearing or upon the failure of the health maintenance organization to appear at the hearing, the commissioner shall take appropriate action and mail written findings to the health maintenance organization. (b)(1) The action of the commissioner may be appealed to Pulaski County Circuit Court upon the record of the proceedings, hearing, and findings of the commissioner. (2) The commissioner's decision shall be affirmed if it is supported by the preponderance of the evidence in the record. (c) The Arkansas Administrative Procedure Act, § 25-15-201 et seq., applies to proceedings under this section to the extent it is not in conflict with this section.

Ark. Code Ann. § 23-76-127 Fees.

A health maintenance organization subject to this chapter shall pay to the State Insurance Department Trust Fund as special revenues the following fees: (1) For filing and reviewing all documents necessary for issuance of an original certificate of authority, one thousand dollars ($1,000); (2) For issuance of the original certificate of authority, two hundred dollars ($200); (3) For annual renewal of the certificate of authority, one hundred dollars ($100); (4) For filing an annual statement, fifty dollars ($50.00); and (5) For filing amendments to documents required under § 23-76-107, one hundred dollars ($100).

Ark. Code Ann. § 23-76-128 Applications, filings, and reports public.

All applications, filings, and reports required under this chapter shall be treated as public documents.

Ark. Code Ann. § 23-76-129 Medical information confidential — Exceptions.

(a) Any data or information pertaining to the diagnosis, treatment, or health of any enrollee or applicant obtained from the person or from any provider by any health maintenance organization shall be held in confidence and shall not be disclosed to any person except to the extent that it may be necessary to carry out the purposes of this chapter, upon the express consent of the enrollee or applicant, pursuant to statute or court order for the production of evidence or the discovery thereof or in the event of claim of litigation between the person and the health maintenance organization wherein the data or information is pertinent. (b) A health maintenance organization shall be entitled to claim any statutory privileges against the disclosure which the provider who furnished the information to the health maintenance organization is entitled to claim.

Ark. Code Ann. § 23-76-130 Insurance Commissioner's authority to contract.

(a) The Insurance Commissioner may contract with qualified persons to make recommendations concerning the adequacy, network adequacy, or accessibility of healthcare services under a healthcare plan furnished or proposed to be furnished by a health maintenance organization. (b) The commissioner may accept all or part of the recommendations.

Ark. Code Ann. § 23-76-131 Tax on premiums and copayments.

(a)(1)(A)(i) Each health maintenance organization shall pay a tax on the premiums for coverages provided during the calendar year. (ii) The tax shall be paid on an annual basis and on a quarterly estimate basis as prescribed by the Insurance Commissioner and reconciled at the time of filing the annual statement. (B) The taxes due from licensed health maintenance organizations under this section shall be computed on net direct written premiums at the rate described in this section and in §§ 26-57-603 and 26-57-604. (C)(i) Further, the premium taxes at the same rate due under this section for health maintenance organization copayments shall only be computed, reported, and paid on the copayments actually received and collected by the health maintenance organization. (ii) Copayments paid by the patient directly to the doctor, hospital, or other medical providers shall not be subject to taxation. (2)(A) The tax shall be paid to the Treasurer of State through the commissioner as a tax imposed for the privilege of transacting business in this state. (B) The tax shall be computed at the rate of two and one-half percent (2½%), except as provided in subsection (b) of this section. (3)(A) The taxes shall be paid on a quarterly estimate basis as prescribed by the commissioner and reconciled annually at the time of filing the annual statement. (B) In his or her discretion, the commissioner may suspend or revoke the certificate of authority of any health maintenance organization that fails to pay the tax levied under this section on the date due or during any reasonable extension of time therefor which may have been expressly granted by the commissioner for good cause upon the health maintenance organization's request. (b)(1) For health maintenance organizations maintaining a home office or a regional office in this state, the tax shall be computed at the rate of two and one-half percent (2½%), except for the credit as provided in § 26-57-604. For purposes of this subsection, any office in this state shall be deemed a health maintenance organization's home or regional office if the office performs substantially the following functions in this state: (A) Underwriting; (B) Medical; (C) Legal; (D) Issuance of certificates or contracts; (E) Claims servicing, information, and service; (F) Advertising and publications; (G) Public relations; and (H) Hiring, testing, and training of sales or service forces. (2) On or before March 1 of each year, any health maintenance organization desiring to qualify an office in this state as a home or regional office shall furnish to the commissioner on forms prescribed by the commissioner proof that it is operating a home or regional office in this state. (c) The commissioner shall deposit all taxes collected under this section into the State Treasury as general revenues.

Ark. Code Ann. § 23-76-132 College students.

If a health maintenance organization requires the selection or assignment of a primary care physician, the health maintenance organization shall provide an enrollee who is a student enrolled at a postsecondary institution one (1) of the following options: (1) To select two (2) primary care physicians, one (1) located near the enrollee's domicile and one (1) located near the postsecondary institution, provided both primary care physicians have provider contracts with the health maintenance organization; or (2) To select a primary care physician when the enrollee resides near the enrollee's domicile and then change primary care physicians when the enrollee attends the postsecondary institution, the effective date of the change to be the first of the month following notification, provided both primary care physicians have provider contracts with the health maintenance organization.

Source: Public.Resource.Org / UniCourt, Official Code of Arkansas Annotated, Release 78 (2020) (unicourt.github.io/cic-code-ar)URL: https://unicourt.github.io/cic-code-ar/transforms/ar/ocar/r78/gov.ar.code.title.23.htmlFetched: 11/8/2026