WILLIAM DONALD SCHAEFER, Governor Ch. 578

(2) "Preferred provider policies or preferred provider contracts" means
insurance policies or insurance contracts which specify the services and how services are
to be covered when rendered by preferred and nonpreferred providers.

(3) "Preferred provider" means a provider who has contracted with an
insurer to meet the terms and conditions offered in the preferred provider policy or
preferred provider contract.

(4) "Provider" means any person, including a physician or hospital, who is
licensed or otherwise authorized to provide health care services, within the scope of the
license or authorization.

(5) "Nonpreferred provider" means a provider eligible for payment under
a preferred provider policy or preferred provider contract, who is not a contractee
under the provisions of the insurance policy or insurance contract.

(6) "Unfair discrimination" means any act, method of competition, or
practice engaged in by an insurer, which is prohibited by §§ 217 through 234, inclusive,
of this subtitle or any act, method of competition, or practice not specified in §§ 217
through 234, inclusive, that the Commissioner believes is unfair or deceptive and which
results in the institution of an action by the Commissioner under § 216 of this subtitle.

(b) (1) Subject to the approval of the Commissioner, an insurer, including any
nonprofit health service plan specified under Subtitle 20 of this article, may offer or
administer a health benefit program under which the insurer may offer preferred
provider policies or preferred provider contracts that limit the numbers and types of
providers of health care services eligible for payment as preferred providers under the
insurance policies or insurance contracts.

(2) An insurer may establish terms and conditions that shall be met by a
provider in order to qualify for payment as a preferred provider under the insurance
policies or insurance contracts.

(3) If a preferred provider policy or preferred provider contract provides
for reimbursement for any service that is within the lawful scope of practice of a health
care provider licensed under the Health Occupations Article, any participant,
beneficiary, or other person covered by the insurance policy or insurance contract shall
be entitled to reimbursement for that service.

(4) Preferred provider policies or preferred provider contracts offered
under this section shall provide for payment of services rendered by nonpreferred
providers. Unless the insurer demonstrates to the satisfaction of the Insurance
Commissioner that an alternative level of payment is more appropriate under the
circumstances, aggregate payments in any full calendar year made under this paragraph
to nonpreferred providers after all deductible and copayment provisions have been
applied may not on the average be less than 80% of the aggregate payments in that full
calendar year to preferred providers for similar services in the same geographic area
pursuant to the preferred providers' agreements to provide the services.

(e) If the rates for each institutional provider under a preferred provider policy

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