Health Maintenance Organizations
See bold sections below:
Section I. Definitions.
Unless the context otherwise requires, the following definitions shall apply as the terms are used in both this regulation and Chapter 33 of Title 38 of the 1976 South Carolina Code, as amended (the Health Maintenance Organization Act of 1987):
A. “Basic health care services” means emergency care, inpatient hospital and physician care, and outpatient medical services. “Basic health care services” does not include dental services, mental health services, or services for alcohol or drug abuse, although a health maintenance organization may at its option elect to provide these services in its coverage.
B. “Contractholder” means a person or entity consisting of employees or eligible persons which has entered into a group contract with a health maintenance organization for the provision of specified health care services to its eligible employees or eligible persons.
C. “Commissioner” means the Chief Insurance Commissioner.
D. “Copayment” or “deductible” means the amount specified in the evidence of coverage that the enrollee shall pay directly to the provider for covered health care services, which may be stated in either specific dollar amounts or as a percentage of the provider’s usual or customary charge.
E. “Department” means the Department of Health and Environmental Control.
F. “Eligible dependent” means any member of a subscriber’s family who meets the eligibility requirements set forth in Subsection D of Section III of this regulation.
G. “Emergency care services” means:
1. Within the service area: covered health care services rendered by affiliated or non-affiliated providers under unforeseen conditions that require immediate medical attention. Emergency care services within the service area shall include covered health care services from non-affiliated providers only when delay in receiving care from the health maintenance organization could reasonably be expected to cause severe jeopardy to the enrollee’s condition.
2. Outside the service area: medically necessary health care services that are immediately required because of unforeseen illness or injury while the enrollee is outside the geographical limits of the health maintenance organization’s service area.
H. “Enrollee” or “member” means an individual who is enrolled in a health maintenance organization.
I. “Evidence of coverage” means any certificate, agreement or contract issued to an enrollee setting out the coverage to which he is entitled.
J. “Group contract” means a contract for health care services which by its terms limits eligibility to members of a specified group.
K. “Health care services” means any services included in the furnishing to any individual of medical or dental care or hospitalization, or incident to the furnishing of such care or hospitalization, as well as the furnishing to any person of any and all other services for the purposes of preventing, alleviating, curing, or healing human illness, injury or physical disability.
L. “Health maintenance organization” means any person that undertakes to provide or arrange for basic health care services to enrollees for a fixed prepaid premium.
M. “Health professional” means any professional engaged in the delivery of health care services who is licensed, and practicing within the scope of such a license, where such licensing is required by state law.
N. “Hospital” means a duly licensed institution which provides general and specialized inpatient medical care. The term “hospital” shall not include a convalescent facility, nursing home, or any institution or part thereof which is used principally as a convalescent facility, rest facility, nursing facility, or facility for the aged.
O. “Individual contract” or “nongroup contract” means a contract for health care services issued to and covering an individual or a family.
P. “Medical necessity” or “medically necessary” means appropriate and necessary services as determined by any provider affiliated with the health maintenance organization which are rendered to an enrollee for any condition requiring, according to generally accepted principles of good medical practice, the diagnosis or direct care and treatment of an illness or injury and are not provided only as a convenience.
Q. “Out-of-area services” means the health care services that a health maintenance organization covers when its enrollees are outside of the service area.
R. “Person” means any natural or artificial person including but not limited to individuals, partnerships, associations, trusts, or corporations.
S. “Physician” means a duly licensed doctor of medicine or osteopathy practicing within the scope of such a license.
T. “Primary care physician” means a physician who supervises, coordinates, and provides initial and basic care to members; initiates their referral for specialist care and maintains continuity of patient care.
U. “Provider” means any physician, dentist, hospital, pharmacist, or other person properly licensed, where required, to furnish health care services.
V. “Service area” means the geographical area as approved by the Commissioner within which the health maintenance organization provides or arranges for health care services that are available and accessible to enrollees.
W. “Skilled nursing facility” means a facility that is operated pursuant to law and primarily engaged in providing, in addition to room and board accommodations, skilled nursing care under the supervision of a duly licensed physician.
X. “Subscriber” means the individual whose employment or other status, except for family dependency, is the basis for eligibility for enrollment in the health maintenance organization and who is in fact enrolled in the health maintenance organization.
Y. “Supplemental health care services” means any health care services other than basic health care services.
Section II. License Requirements.
A. Health Maintenance Organizations.
1. No person may undertake to provide or arrange for any basic health care service for a fixed prepaid premium in this State without first obtaining a certificate of authority from the Commissioner to transact business as a health maintenance organization.
2. No health maintenance organization chartered, organized and existing under the laws of the State will be licensed by the Commissioner unless it meets all requirements of law and this regulation and it maintains its records, accounts, home office and principal place of business in this State.
3. No health maintenance organization chartered, organized and existing under the laws of another state will be licensed by the Commissioner unless it meets all requirements of law and this regulation and the Commissioner has determined that:
a. the applicant is registered as a foreign corporation to do business in this State;
b. the applicant is subject to regulation of its financial condition in its state of domicile, including regular financial examination not less frequently than once every three years; and
c. the applicant complies with such conditions as the Commissioner may prescribe with respect to the maintenance of books, records, accounts and facilities in this State.
1. An “agent” means a person who is appointed or employed by a health maintenance organization and who engages in solicitation of membership in the health maintenance organization. The term “agent” does not include an employee of an employer, union or other contractholder to whom a master subscriber contract has been issued whose duties include enrolling members in the health maintenance organization on behalf of the employer, union or other contractholder.
2. No person may act as an agent on behalf of a health maintenance organization in this State unless he has been licensed by the Commissioner as an accident and health insurance agent for that health maintenance organization. No health maintenance organization may accept members solicited by, or otherwise transact business through, persons who are not licensed by the Commissioner as accident and health insurance agents for the health maintenance organization. Salaried employees of the health maintenance organization are exempt from licensing requirements.
Section III. Requirements for Contracts and Evidence of Coverage.
A. Each subscriber shall be entitled to a contract or evidence of coverage as approved by the Commissioner. A contract or evidence of coverage shall be delivered or issued for delivery to a subscriber or to the contractholder for delivery to the subscriber within a reasonable time after enrollment, but not more than thirty (30) days from the later of the effective date of coverage or the date on which the health maintenance organization is notified of enrollment.
B. Health Maintenance Organization Information.
1. The contract and evidence of coverage shall contain the name, address and telephone number of the health maintenance organization, and where and in what manner information is available as to how services may be obtained.
2. A toll-free or local phone number within the service area for calls, without charge to members, to the health maintenance organization’s administrative office shall be made available and disseminated to enrollees to adequately provide telephone access for member services, problems or questions.
C. Entire Contract.
1. The contract shall contain a statement that the contract, all applications and any amendments thereto shall constitute the entire agreement between the parties.
2. No portion of the charter, bylaws or other document of the health maintenance organization shall be part of such a contract unless set forth in full in the contract or attached thereto.
D. Term of Coverage.
1. The contract shall contain the time and date or occurrence upon which coverage takes effect, including any applicable waiting periods, or describe how the time and date or occurrence upon which coverage takes effect is determined.
2. The contract shall contain the time and date or occurrence upon which coverage will terminate.
E. Eligibility Requirements.
1. The contract and evidence of coverage shall contain eligibility requirements indicating the conditions that must be met to enroll as a subscriber or eligible dependent, the limiting age for subscribers and eligible dependents including the effects of Medicare eligibility, and a clear statement regarding coverage of newborn children.
2. The definition of an eligible dependent shall as a minimum include:
a. the spouse of the subscriber;
b. an unmarried dependent child of the subscriber who has not reached age 19;
c. an unmarried dependent child of the subscriber age 19 or over, who is both incapable of self support because of intellectual disability, mental illness or physical incapacity which began before the child reached age 19, and chiefly dependent upon the subscriber for support and maintenance; or
d. an unmarried dependent child of the subscriber age 19 through 22 who is attending a recognized college or university, trade or secondary school on a full-time basis.
3. The definition of a dependent child shall as a minimum include children who are:
a. related to the subscriber as either a natural child, a legally adopted child, a stepchild, a foster child, or a child under legal guardianship; or
b. any other child residing in the subscriber’s household and who qualifies as a dependent of the subscriber or the subscriber’s spouse under the United States Internal Revenue Code and federal tax regulations.
4. All contracts and evidences of coverage shall provide coverage for a newly-born child of the subscriber from the moment of birth. Medically diagnosed congenital defects and birth abnormalities shall be treated the same as any other illness or injury for which coverage is provided. The contract and evidence of coverage may require that notification of birth of a newborn child and payment of any required premium must be furnished to the health maintenance organization within thirty-one (31) days after the date of birth in order for such coverage to have become effective and to continue beyond such thirty-one (31) day period.
F. Benefits and Services within the Service Area. The contract and evidence of coverage shall contain a specific description of benefits and services available within the service area.
G. Emergency Care Services. The contract and evidence of coverage shall contain a specific description of benefits and services available for emergencies twenty-four (24) hours a day, seven (7) days a week, including disclosure of any restrictions on emergency care services. No contract or evidence of coverage shall limit the coverage of emergency services within the service area to affiliated providers only.
H. Out-of-Area Benefits and Services. The contract and evidence of coverage shall contain a specific description of benefits and services available out of the service area.
I. Copayments, Deductibles, Limitations and Exclusions. The contract and evidence of coverage shall contain a description of any copayments, deductibles, limitations or exclusions on the services, kind of services, benefits, or kind of benefits to be provided, including any copayments, deductibles, limitations or exclusions due to preexisting conditions, waiting periods or an enrollee’s refusal of treatment.
J. Cancellation or Termination. The contract and evidence of coverage shall contain the conditions upon which cancellation or termination may be effected by the health maintenance organization or the subscriber.
K. Renewal. The contract and evidence of coverage shall contain the conditions for, and any restrictions upon, the subscriber’s right to renewal.
L. Reinstatement. The contract and evidence of coverage shall contain the conditions for, and any restrictions upon, the subscriber’s right to reinstatement.
M. Grace Period.
1. The contract and evidence of coverage shall provide for a grace period of not less than thirty-one (31) days for the payment of any premium except the first, during which coverage shall remain in effect if payment is made during the grace period.
2. During the grace period, the health maintenance organization shall remain liable for providing the services and benefits contracted for, the contractholder shall remain liable for the payment of the premium for the time coverage was in effect during the grace period, and the subscriber shall remain liable for any copayments or deductibles owed.
N. Claims. The contract and evidence of coverage shall contain procedures for filing claims that include:
1. any required notice to the health maintenance organization;
2. if any claim forms are required, how, when and where to obtain and submit them;
3. any requirements for filing proper proofs of loss;
4. any time limit on payment of claims;
5. notice of any requirement for resolving disputed claims including arbitration; and
6. a statement of restrictions, if any, on assignment of sums payable to the enrollee by the health maintenance organization.
O. Complaint System and Arbitration. The contract and evidence of coverage shall contain a description of the health maintenance organization’s method for resolving enrollee complaints, incorporating procedures to be followed by the enrollee in the event any dispute arises under the contract, including any requirements for arbitration.
P. Conversion of Coverage.
1. The contract and evidence of coverage shall contain a conversion provision which provides that each enrollee has the right to convert coverage to an individual health maintenance organization contract or to a policy of health insurance issued by a licensed insurer on a form previously approved by the Chief Insurance Commissioner in the following circumstances:
a. upon termination of eligibility for coverage under a group or individual contract; or
b. upon termination of the group contract.
2. To obtain the conversion contract, an enrollee shall submit a written application and the applicable premium payment within the time period and in the manner prescribed by Section 38-71-770. The enrollee shall be entitled to the same right of continuation of coverage as provided therein.
3. A conversion contract shall not be required to be made available if:
a. the enrollee’s termination of coverage occurred for any of the reasons listed in Subparagraphs 1.a.(1), (2), or (3) of Subsection B of Section IV of this regulation;
b. the enrollee is covered by or is eligible for benefits under Medicare, Title XVIII of the United States Social Security Act;
c. the enrollee is covered by or is eligible for similar hospital, medical or surgical benefits under state or federal law;
d. the enrollee is covered by or is eligible for similar hospital, medical or surgical benefits under any arrangement of coverage for individuals in a group;
e. the enrollee is covered for similar benefits by an individual policy or contract; or
f. the enrollee has not been continuously covered during the three-month period immediately preceding that person’s termination of coverage.
4. As a minimum, the conversion contract shall provide basic health care services if conversion is to a health maintenance organization contract or shall provide benefits meeting the minimum requirements of Section 38-71-770, if conversion is to a policy of health insurance.
5. Coverage shall be provided without requiring evidence of insurability and shall not impose any preexisting condition limitations or exclusions as described in Subsection A of Section IV other than those remaining unexpired under the contract from which conversion is exercised. Any probationary or waiting period set forth in the conversion contract shall be deemed to commence on the effective date of the enrollee’s coverage under the prior contract.
Q. Group Contract Discontinuance and Replacement. The provision of S. C. Code Section 38-71-760 governing discontinuance and replacement of coverage are applicable to group health maintenance organization contracts.
R. Coordination of Benefits.
1. The contract and evidence of coverage may contain a provision for coordination of benefits that shall be consistent with that applicable to other health insurers and health maintenance organizations in South Carolina.
2. Any provisions or rules for coordination of benefits established by a health maintenance organization shall not relieve a health maintenance organization of its duty to provide or arrange for a covered health care service to any enrollee because the enrollee is entitled to coverage under any other contract, policy or plan, including coverage provided under government programs.
S. Right to Examine Contract.
1. An individual contract shall contain a provision stating that a person who has entered into an individual contract with a health maintenance organization shall be permitted to return the contract within ten (10) days of receiving it and to receive a refund of the premium paid if the person is not satisfied with the contract for any reason.
2. If the contract is returned to the health maintenance organization or to the agent through whom it was purchased, it is considered void from the beginning.
3. However, if services are rendered or claims are paid for such person by the health maintenance organization during the ten-day examination period, the person shall not be permitted to return the contract and receive a refund of the premium paid.
T. Subrogation/Injuries Caused by Third Parties. Any provisions concerning subrogation for injuries caused by third parties shall conform to the requirements of S. C. Code Section 38-71-190 (1976), as amended.
U. Conformity with State Law. Any contract and evidence of coverage that contains any provision not in conformity with the Health Maintenance Organization Act of 1987 shall not be rendered invalid but shall be construed and applied as if it were in full compliance with this regulation and the Health Maintenance Organization Act of 1987.
Section IV. Prohibited Practices.
A. Preexisting Conditions.
1. A health maintenance organization contract may contain a provision limiting coverage for preexisting conditions.
2. The preexisting conditions must be covered no later than twelve months without medical care, treatment, or supplies ending after the effective date of the coverage or twelve months after the effective date of the coverage, whichever occurs first.
3. Preexisting conditions are defined as “those conditions for which medical advice or treatment was received or recommended no more than twelve months prior to the effective date of a person’s coverage”.
B. Termination of Coverage.
a. No health maintenance organization shall cancel coverage of services provided an enrollee under an individual or group health maintenance organization contract except for one or more of the following reasons:
(1) failure to pay the amounts due under the contract;
(2) fraud or material misrepresentation in enrollment or in the use of services or facilities;
(3) material violation of the terms of the contract;
(4) failure to meet the eligibility requirements under a group contract, provided that a conversion option is offered.
b. However, coverage shall not be cancelled, terminated or nonrenewed on the basis of the status of the enrollee’s health nor on the fact that the enrollee has exercised his rights under the health maintenance organization’s complaint system by registering a complaint against the health maintenance organization.
a. Group Contracts. No health maintenance organization shall nonrenew a group health maintenance organization contract except on the anniversary date of the contract.
b. Individual Contracts. No health maintenance organization shall nonrenew coverage of services provided an enrollee under an individual health maintenance organization contract unless it has received prior approval from the Commissioner, upon such terms as he deems just, to nonrenew all individual health maintenance organization contracts in this State.
4. No health maintenance organization shall cancel, terminate or nonrenew an enrollee’s coverage for services provided under a health maintenance organization contract without giving the enrollee or contractholder written notice of termination which shall be effective at least thirty-one (31) days from the date of mailing or, if not mailed, from the date of delivery and which shall include the reason for termination. For termination due to nonpayment of premium, the grace period as required in Subsection M of Section III of this regulation shall apply. No written notice of termination shall be required to be given for termination due to nonpayment of premium.
5. No health maintenance organization that provides in the contract and evidence of coverage, that coverage of a dependent child shall terminate upon attainment of the limiting age for dependent children shall terminate the coverage of such child if the child is and continues to be both:
a. incapable of self support because of intellectual disability, mental illness or physical incapacity, and
b. chiefly dependent upon the subscriber for support and maintenance.
6. Proof of such incapacity and dependency shall be furnished to the health maintenance organization by the subscriber within thirty-one (31) days of the child’s attainment of the limiting age and subsequently as reasonably required by the health maintenance organization, but not more frequently than annually after the two-year period following the child’s attainment of the limiting age.
C. Unfair Discrimination.
1. No health maintenance organization shall unfairly discriminate against any enrollee or applicant for enrollment on the basis of the age, sex, race, color, creed, national origin, ancestry, religion, marital status or lawful occupation of an enrollee, or because of the frequency of utilization of services by an enrollee.
2. However, nothing shall prohibit a health maintenance organization from setting rates or establishing a schedule of charges in accordance with relevant actuarial data.
3. No health maintenance organization shall expel or refuse to re-enroll any enrollee nor refuse to enroll individual members of a group on the basis of the health status or health care needs of the individual enrollee or member.
Section V. Services.
A. Access to Care.
1. A health maintenance organization shall establish and maintain adequate arrangements to provide the health services contracted for by its subscribers including:
a. reasonable proximity to the business or personal residences of the enrollees so as not to result in unreasonable barriers to accessibility;
b. reasonable hours of operation and after-hours services;
c. emergency care services available and accessible within the service area twenty-four (24) hours a day, seven (7) days a week; and
d. sufficient providers and personnel, including health professionals, administrators and support staff, to assure that all services contracted for will be accessible to enrollees on an appropriate basis without delays detrimental to the health of enrollees.
2. A health maintenance organization utilizing primary care physicians shall make primary care physician services available to each enrollee and shall provide accessibility to medically necessary specialists through staffing, contracting or referral. Such a health maintenance organization shall provide for continuity of care for enrollees referred to specialists.
3. A health maintenance organization shall have written procedures governing the availability of frequently utilized services contracted for by enrollees, including at least the following:
a. well-patient examinations and immunizations;
b. emergency telephone consultation on a twenty-four (24) hours per day, seven (7) days per week basis;
c. treatment of emergencies;
d. treatment of minor illness; and
e. treatment of chronic illnesses.
B. Basic Health Care Services. A health maintenance organization shall provide, or arrange for the provision of, as a minimum, basic health care services which shall include the following:
1. Emergency care services, as defined in Section 1 of this regulation.
2. Inpatient hospital services, meaning medically necessary hospital services including, but not limited to, room and board; general nursing care; special diets when medically necessary; use of operating room and related facilities; use of intensive care units and services; x-ray, laboratory and other diagnostic tests; drugs, medications, biologicals, anesthesia and oxygen services; special nursing when medically necessary; physical therapy, radiation therapy and inhalation therapy; administration of whole blood and blood plasma; and short-term rehabilitation services.
3. Inpatient physician care services, meaning medically necessary health care services performed, prescribed, or supervised by physicians or other health professionals including diagnostic, therapeutic, medical, surgical, preventive, referral and consultative health care services.
4. Outpatient medical services, meaning preventive and medically necessary health care services provided in a physician’s office, a non-hospital-based health care facility, or at a hospital. Outpatient medical services shall include but are not limited to diagnostic services; treatment services; laboratory services; x-ray services; referral services; and physical therapy, radiation therapy and inhalation therapy. Outpatient services shall also include preventive health services which shall include, at least a broad range of voluntary family planning counseling services, well-child care from birth, periodic health evaluations for adults, screening to determine the need for vision and hearing correction, and pediatric and adult immunizations in accordance with accepted medical practice.
C. Out-of-Area Services and Benefits.
1. Copayments or deductibles for out-of-area services shall be shown in the contract and evidence of coverage.
2. When an enrollee is traveling or temporarily out of a health maintenance organization’s service area, a health maintenance organization shall provide benefits for reimbursement for emergency care services subject to the following condition:
a. the condition could not reasonably have been foreseen;
b. the enrollee could not reasonably arrange to return to the service area to receive treatment from the health maintenance organization’s provider;
c. the travel must be for some purpose other than the receipt of medical treatments; and
d. the health maintenance organization is notified by telephone within twenty-four (24) hours of the commencement of such care unless it is shown that it was not reasonably possible to communicate with the health maintenance organization in such time limits.
3. Services received by an enrollee outside of the health maintenance organization’s service area will be covered only so long as it is unreasonable to return the enrollee to the service area.
D. Supplemental Health Care Services.
1. In addition to the basic health care services required to be provided in Subsection B of this Section, a health maintenance organization may offer to its enrollee any supplemental health care services it chooses to provide.
2. Limitations as to time and cost may vary from those applicable to basic health care services.
Section VI. Other Requirements.
A. Description of Providers.
1. A health maintenance organization shall provide its subscribers with a list of the names and locations of all of its providers no later than the time of enrollment or the time the contract and evidence of coverage are issued and upon request thereafter. If a provider is no longer affiliated with a health maintenance organization, the health maintenance organization shall provide notice of such change to its affected subscribers and to the Department in a timely manner. Subject to the approval of the Commissioner, a health maintenance organization may provide its subscribers with a list of providers or provider groups for a segment of the service area. However, a list of all providers shall be made available to subscribers upon request.
2. Any list of providers shall contain a notice regarding the availability of the listed providers. Such notice shall be in not less than twelve point type and be placed in a prominent place on the list of providers. The notice shall contain the following language: Enrolling in [name of HMO] does not guarantee services by a particular provider on this list. If you wish to be sure of receiving care from specific providers listed, you should contact the health maintenance organization to be sure that the particular provider is accepting additional patients for [name of HMO]. Even if a particular provider is participating in [name of HMO] on the date you enroll, there is no guarantee that the provider will continue to participate during the entire term of your enrollment in [name of HMO].
B. Description of the Service Area.
1. A health maintenance organization shall provide its subscribers with a description of its service area no later than the time of enrollment or the time the contract and evidence of coverage is issued and upon request thereafter.
2. If the description of the service area is changed, the health maintenance organization shall provide at such time a new description of the service area to its affected subscribers and to the Department.
C. Copayments and Deductibles.
1. A health maintenance organization may require copayments or deductibles of enrollees as a condition for the receipt of specific health care services.
2. Copayments or deductibles for basic health care services shall be shown in the contract and evidence of coverage.
D. Complaint System.
1. A complaint system shall be established and maintained by a health maintenance organization to provide reasonable procedures for the prompt and effective resolution of written complaints.
2. The complaint system shall provide for written acknowledgement of complaints and complaints to be resolved or to have a final determination of the complaint by the health maintenance organization complaint system within a reasonable period of time, but not more than ninety (90) days from the date the complaint is registered. This period may be extended in the event of a delay in obtaining the documents or records necessary for the resolution of the complaint, or by the mutual written agreement of the health maintenance organization and the enrollee.
3. Pending the resolution of a written complaint filed by a subscriber or enrollee, coverage may not be terminated for any reason which is the subject of the written complaint, except where the health maintenance organization has, in good faith, made a reasonable effort to resolve the written complaint through its complaint system and coverage is being terminated as provided for in Subsection B of Section IV.
4. If enrollee complaints and grievances may be resolved through a specified arbitration agreement, the enrollee shall be advised in writing of his rights and duties under the agreement at the time the complaint is registered. Any such agreement must be accompanied by a statement setting forth in writing the terms and conditions of binding arbitration. Any health maintenance organization that makes such binding arbitration a condition of enrollment must fully disclose this requirement to its enrollees in the contract and evidence of coverage.
Section VII. Severability.
If any provision of this regulation or the application thereof to any person or circumstance is for any reason held to be invalid, the remainder of the regulation and the application of such provision to other persons or circumstances shall not be affected thereby.
Section VIII. Effective Date.
A. This regulation shall become effective ninety (90) days after final publication in the State Register.
B. All health maintenance organization contracts issued or renewed after this date must comply with its provisions.