Limited Health Service Organizations

KRS tit. XXV, ch. 304, subtit. 38A

in effect

KRS 304.38A-010 Definitions for subtitle

304.38A-010. Definitions for subtitle As used in this subtitle, unless the context requires otherwise: (1) "Enrollee" means an individual who is enrolled in a limited health services benefit plan; (2) "Evidence of coverage" means any certificate, agreement, contract, or other document issued to an enrollee stating the limited health services to which the enrollee is entitled. All coverages described in an evidence of coverage issued by a limited health service organization are deemed to be "limited health services benefit plans" to the extent defined in KRS 304.17C-010 unless exempted by the commissioner; (3) "Limited health service" means dental care services, vision care services, mental health services, substance abuse services, chiropractic services, pharmaceutical services, podiatric care services, and such other services as may be determined by the commissioner to be limited health services. Limited health service shall not include hospital, medical, surgical, or emergency services except as these services are provided incidental to the limited health services set forth in this subsection; (4) "Limited health service contract" means any contract entered into by a limited health service organization with a policyholder to provide limited health services; (5) "Limited health service organization" means a corporation, partnership, limited liability company, or other entity that undertakes to provide or arrange limited health service or services to enrollees. A limited health service organization does not include a provider or an entity when providing or arranging for the provision of limited health services under a contract with a limited health service organization, health maintenance organization, or a health insurer; and (6) "Provider" means the same as defined in KRS 304.17A-005(23). Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1515, effective July 15, 2010. -- Amended 2006 Ky. Acts ch. 253, sec. 7, effective July 12, 2006. -- Amended 2005 Ky. Acts ch. 144, sec. 13, effective June 20, 2005. -- Created 2002 Ky. Acts ch. 105, sec. 10, effective July 15, 2002.

KRS 304.38A-020 Certificate of authority

304.38A-020. Certificate of authority No person may operate a limited health service organization in this state without obtaining and maintaining a certificate of authority from the commissioner pursuant to this section and KRS 304.38A-030, 304.38A-040, 304.38A-050, 304.38A-060, 304.38A- 070, 304.38A-090, and 304.38A-110, except an insurer authorized to transact health insurance in this state. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1516, effective July 15, 2010. -- Created 2002 Ky. Acts ch. 105, sec. 11, effective July 15, 2002.

KRS 304.38A-030 Application for certificate of authority

304.38A-030. Application for certificate of authority An application for a certificate of authority to operate a limited health service organization shall be filed with the commissioner on a form prescribed by the commissioner. The application shall be verified by an officer or authorized representative of the applicant and shall set forth, or be accompanied by, the following: (1) A copy of the applicant's basic organizational document, such as the articles of incorporation, articles of association, partnership agreement, trust agreement, or other applicable documents and all amendments to these documents; (2) A copy of all bylaws, rules, and regulations, or similar documents, if any, regulating the conduct of the applicant's internal affairs; (3) A list of the names, addresses, official positions, and biographical information of the individuals who are responsible for conducting the applicant's affairs, including but not limited to all members of the board of directors, board of trustees, executive committee, or other governing board or committee, the principal officers, and any person or entity owning or having the right to acquire ten percent (10%) or more of the voting securities of the applicant, and the partners or members in the case of a partnership or association. Such listing shall fully disclose the extent and nature of any contracts or arrangements between any individual who is responsible for conducting the applicant's affairs and the limited health service organization, including any possible conflicts of interest; (4) A complete biographical statement, on forms prescribed by the department, with respect to each individual identified under this section; (5) A statement generally describing the applicant, its facilities, personnel, and the limited health services to be offered; (6) A copy of the form of any contract made, or to be made between the applicant and any person listed in subsection (3) of this section; (7) A copy of the form of any contract made or to be made between the applicant and any person, corporation, partnership, or other entity for the performance on the applicant's behalf of any functions including but not limited to marketing, administration, enrollment, investment management and provider agreements, subcontract agreements, and risk-sharing arrangements for the provision of limited health services to enrollees; (8) A copy of the applicant's most recent financial statements audited by independent certified public accountants. If the financial affairs of the applicant's parent company are audited by independent certified public accountants but those of the applicant are not, then a copy of the most recent audited financial statement of the applicant's parent company, certified by an independent certified public accountant, attached to which shall be consolidated financial statements of the applicant, shall satisfy this requirement unless the commissioner determines that additional or more recent financial information is required for the proper administration of this subtitle; (9) A copy of the applicant's financial plan, including a three (3) year projection of anticipated operating results with all material assumptions, a statement of the sources of working capital, and any other sources of funding and provisions for contingencies; (10) A description of the proposed method of marketing; (11) A statement acknowledging that all lawful process in any legal action or proceeding against the applicant on a cause of action arising in this state is valid if served in accordance with KRS 304.3-230; (12) A description of how the applicant will comply with KRS 304.38A-040 and 304.38A-080; (13) The fee for issuance of a certificate of authority provided in Subtitle 4 of this chapter; and (14) Such other information as the commissioner may reasonably require to make the determinations required by this subtitle. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1517, effective July 15, 2010. -- Created 2002 Ky. Acts ch. 105, sec. 12, effective July 15, 2002.

KRS 304.38A-040 Issuance of certificate of authority -- Notification of deficiencies in application and of reasons for denial

304.38A-040. Issuance of certificate of authority -- Notification of deficiencies in application and of reasons for denial (1) Following receipt of an application filed pursuant to KRS 304.38A-030, the commissioner shall review the application and notify the applicant of any deficiencies. The commissioner shall issue a certificate of authority to an applicant if the following conditions are met: (a) The applicant has verified to the commissioner that it has an initial minimum worth of at least two hundred fifty thousand dollars ($250,000); (b) The requirements of KRS 304.38A-030 have been fulfilled; (c) The individuals responsible for conducting the applicant's affairs are competent, trustworthy, and possess good reputations, and have had appropriate experience, training, or education; (d) The applicant is financially responsible and may reasonably be expected to meet its obligations to enrollees and to prospective enrollees. In making his or her determination, the commissioner may consider: 1. The financial soundness; 2. The adequacy of surplus, working capital, other sources of funding, and provisions for contingencies; 3. Any agreement for paying the cost of the limited health services or for alternative coverage in the event of insolvency of the limited health service organization; and 4. The manner in which the requirements of KRS 304.38A-030 have been fulfilled; and (e) Any deficiencies identified by the commissioner have been corrected. (2) If the certificate of authority is denied, the commissioner shall notify the applicant and shall specify the reasons for denial in the notice. The limited health service organization shall have sixty (60) days from the date of receipt of the notice to request a hearing before the commissioner pursuant to KRS 304.2-310. (3) Each certificate of authority issued to a limited health service organization shall designate the type of services the limited health service organization is authorized to provide. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1518, effective July 15, 2010. -- Created 2002 Ky. Acts ch. 105, sec. 13, effective July 15, 2002.

KRS 304.38A-050 Conditions for maintaining eligibility for certificate of authority

304.38A-050. Conditions for maintaining eligibility for certificate of authority In order to maintain its eligibility for a certificate of authority, a limited health service organization shall continue to meet all conditions required to be met under this subtitle and the relevant administrative regulations for the initial application for and issuance of its certificate of authority under this subtitle. Effective: July 15, 2002 History: Created 2002 Ky. Acts ch. 105, sec. 14, effective July 15, 2002.

KRS 304.38A-060 Addition of limited health services -- Notification of disapproval -- Hearing

304.38A-060. Addition of limited health services -- Notification of disapproval -- Hearing (1) A limited health service organization may add one (1) or more limited health services by: (a) Filing the relevant information required by KRS 304.38A-030; (b) Demonstrating compliance with KRS 304.38A-030 and 304.38A-080; and (c) Obtaining approval from the commissioner prior to offering the additional limited health service. (2) If the filings are disapproved, the commissioner shall notify the limited health service organization and shall specify the reasons for disapproval in the notice. The limited health service organization shall have sixty (60) days from the date of receipt of the notice to request a hearing before the commissioner pursuant to KRS 304.2-310. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1519, effective July 15, 2010. -- Created 2002 Ky. Acts ch. 105, sec. 15, effective July 15, 2002.

KRS 304.38A-070 Application of provisions of chapter

304.38A-070. Application of provisions of chapter A limited health service organization shall be subject to the provisions of this subtitle, and to the following provisions of this chapter, to the extent applicable and not in conflict with the expressed provisions of this subtitle: (1) Subtitle 1--Scope--General Definitions and Provisions; (2) Subtitle 2--Insurance Commissioner; (3) Subtitle 3--Authorization of Insurers and General Requirements; (4) Subtitle 4--Fees and Taxes; (5) Subtitle 5--Kinds of Insurance--Limits of Risk--Reinsurance; (6) Subtitle 6--Assets and Liabilities; (7) Subtitle 7--Investments; (8) Subtitle 8--Administration of Deposits; (9) Subtitle 9--Agents, Consultants, Solicitors, and Adjusters; (10) Subtitle 12--Trade Practices and Frauds; (11) Subtitle 14--The Insurance Contract; (12) Subtitle 17--Health Insurance Contracts; (13) Subtitle 17C--Limited Health Services Benefit Plans; (14) Subtitle 18--Group and Blanket Health Insurance; (15) Subtitle 24--Domestic Stock and Mutual Insurers; (16) Subtitle 25--Continuity of Management; (17) Subtitle 26--Insider Trading of Equity Securities; (18) Subtitle 33--Insurers Rehabilitation and Liquidation; (19) Subtitle 37--Insurance Holding Company Systems; (20) Subtitle 47--Insurance Fraud; and (21) Subtitle 99--Penalties. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1520, effective July 15, 2010. -- Created 2002 Ky. Acts ch. 105, sec. 16, effective July 15, 2002.

KRS 304.38A-080 Net worth -- Deposit -- Risk-based capital requirements

304.38A-080. Net worth -- Deposit -- Risk-based capital requirements (1) Each limited health service organization shall at all times have and maintain a net worth of not less than one hundred twenty-five thousand dollars ($125,000). (2) (a) Each limited health service organization shall deposit with the commissioner or with any organization or trustee acceptable to the commissioner through which a custodial or controlled account is utilized, cash, securities, or any combination of these or other measures that is acceptable to the commissioner in an amount equal to fifty thousand dollars ($50,000). (b) The deposit shall be an admitted asset. (3) A limited health service organization shall at all times comply with the risk-based capital requirements for health organizations in administrative regulations promulgated by the commissioner for health maintenance organizations and other health organizations. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1521, effective July 15, 2010. -- Created 2002 Ky. Acts ch. 105, sec. 17, effective July 15, 2002.

KRS 304.38A-090 Suspension or revocation of certificate of authority -- Notification -- Winding up affairs -- Applicable provisions

304.38A-090. Suspension or revocation of certificate of authority -- Notification -- Winding up affairs -- Applicable provisions (1) The commissioner may suspend or revoke the certificate of authority issued to a limited health service organization pursuant to this subtitle upon determining that any of the following conditions exist: (a) The limited health service organization is operating significantly in contravention of its basic organizational document or in a manner contrary to that described in and reasonably inferred from any other information submitted pursuant to KRS 304.38A-030, unless amendments to the submissions have been filed with and approved by the commissioner; (b) The limited health service organization issues an evidence of coverage or schedule of charges for limited health services which does not comply with the requirements of Subtitle 17C of this chapter; (c) The limited health service organization is unable to fulfill its obligations to furnish limited health services; (d) The limited health service organization is not financially responsible and may reasonably be expected to be unable to meet its obligations to enrollees or prospective enrollees; (e) The net worth of the limited health service organization is less than that required by KRS 304.38A-080 or the limited health service organization has failed to correct any deficiency in its net worth as required by the commissioner; (f) The continued operation of the limited health service organization would be hazardous to its enrollees; or (g) The limited health service organization has otherwise failed to comply with this subtitle. (2) If the commissioner has cause to believe that grounds for the suspension or revocation of a certificate of authority exist, he or she shall notify the limited health service organization in writing specifically stating the grounds for suspension or revocation and fixing a time not more than sixty (60) days thereafter for a hearing on the matter in accordance with KRS Chapter 13B. (3) When the certificate of authority of a limited health service organization is revoked, the organization shall proceed immediately following the effective date of the order of revocation to wind up its affairs, and shall conduct no further business except as may be essential to the orderly conclusion of the affairs of the organization. It shall engage in no further advertising or solicitation whatsoever. The commissioner may, by written order, permit such further operation of the organization as he or she 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 limited health services. (4) A limited health service organization shall be subject to the provisions of KRS 304.2-210 to 304.2-300 and to the provisions of Subtitle 2 of this chapter for determining financial condition, market conduct, and business practices. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1522, effective July 15, 2010. -- Created 2002 Ky. Acts ch. 105, sec. 18, effective July 15, 2002.

KRS 304.38A-100 Transfer of risk -- Plan for evaluating provider -- Additional reserves

304.38A-100. Transfer of risk -- Plan for evaluating provider -- Additional reserves (1) Any limited health service organization that contracts with a provider or provider organization for the transfer of risk to the provider shall take reasonable steps to ensure the transferee is able to accept and manage the risk to be transferred. The limited health service organization shall submit a plan for evaluating a provider's or provider organization's ability to accept and manage risk to the department for approval at least forty-five (45) days prior to the proposed date of the transfer of any risk. (2) If a limited health service organization transfers risk to a provider: (a) Not in compliance with the standards listed in its approved plan; or (b) Prior to filing or receiving approval of its plan, the commissioner may require the limited health service organization to retain additional reserves to cover the risk transferred. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1523, effective July 15, 2010. -- Created 2002 Ky. Acts ch. 105, sec. 19, effective July 15, 2002.

KRS 304.38A-110 Conversion of single service organization -- Net worth and capital requirements

304.38A-110. Conversion of single service organization -- Net worth and capital requirements (1) A person issued a single service organization certificate of authority in accordance with KRS 304.38-065 and holding the certificate of authority on July 15, 2002, shall be converted to a limited health service organization as defined in KRS 304.38A- 010. At the next renewal of the certificate of authority, the person shall be issued a certificate of authority to act as a limited health service organization if it meets the requirements for continuance of the certificate of authority. No certificate of authority to act as a single service organization shall be issued or renewed after July 15, 2002. (2) A single service organization holding a certificate of authority immediately prior to July 15, 2002, that is converted to a limited health service organization according to subsection (1) of this section shall continue to be required to meet the minimum net worth requirement of one hundred twenty-five thousand dollars ($125,000) and shall comply with the risk-based capital requirements for health organizations in administrative regulations promulgated by the commissioner for health maintenance organizations and other health organizations. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1524, effective July 15, 2010. -- Created 2002 Ky. Acts ch. 105, sec. 20, effective July 15, 2002.

KRS 304.38A-115 Requirement for limited health service organizations to comply with specified sections of Subtitle 17A of KRS Chapter 304. (Effective until January 1, 2027)

304.38A-115. Requirement for limited health service organizations to comply with specified sections of Subtitle 17A of KRS Chapter 304. (Effective until January 1, 2027) Limited health service organizations shall comply with: (1) KRS 304.17A-262; (2) KRS 304.17A-265; and (3) KRS 304.17A-591 to 304.17A-599. Effective: January 1, 2025 History: Amended 2024 Ky. Acts ch. 104, sec. 13, effective January 1, 2025. -- Created 2023 Ky. Acts ch. 30, sec. 4, effective January 1, 2025. Legislative Research Commission Note (1/1/2025). 2023 Ky. Acts ch. 30, sec. 7, provides that this statute shall apply to policies, certificates, plans, and contracts issued or renewed on or after January 1, 2025.

KRS 304.38A-120 Repealed, 2025

304.38A-120. Repealed, 2025 Catchline at repeal: Compliance with KRS 304.17A-265. History: Repealed 2024 Ky. Acts ch. 104, sec. 18, effective January 1, 2025. -- Created 2023 Ky. Acts ch. 86, sec. 5, effective June 29, 2023.

Source: Kentucky Legislative Research Commission (legislature.ky.gov)URL: https://apps.legislature.ky.gov/law/statutes/chapter.aspx?id=38756Fetched: 10/20/2026