HARRY HUGHES, Governor

1029

OF THE SOCIAL SECURITY ACT OR TITLE III OF THE PUBLIC HEALTH
SERVICE ACT, PROPOSED TO BE MADE OR MADE WITH GOVERNMENT OR
PRIVATE AGENCIES THAT COVER ALL OR PART OF THE COST OF
SUBSCRIPTIONS TO PROVIDE HEALTH CARE SERVICES, FACILITIES,
APPLIANCES, MEDICINES, OR SUPPLIES SHALL BE FINANCIALLY
SOUND, BASED ON REASONABLE ACTUARIAL ASSUMPTIONS THAT THE
HEALTH MAINTENANCE ORGANIZATION CAN MEET ITS OBLIGATIONS TO
THE AGENCIES AND THEIR BENEFICIARIES BY REASON OF THE HEALTH
MAINTENANCE ORGANIZATION'S NET WORTH POSITION, STOP LOSS,
REINSURANCE ARRANGEMENTS WITH AUTHORIZED INSURERS, OR OTHER
ARRANGEMENTS THAT ARE SATISFACTORY TO THE COMMISSIONER.

(F)  STANDARDS OF QUALITY AND CARE.

THE TERMS OF THE CONTRACTS TO BE OFFERED TO SUBSCRIBERS
SHALL PROVIDE THAT THE HEALTH CARE SERVICES PROVIDED TO
MEMBERS OF THE HEALTH MAINTENANCE ORGANIZATION WILL MEET
REASONABLE STANDARDS OF QUALITY OF CARE THAT ARE APPLICABLE
TO THE GEOGRAPHIC AREA TO BE SERVED, AS APPROVED BY THE
DEPARTMENT.

(G)  LACK OF DISCRIMINATION.

THE PROCEDURES FOR OFFERING HEALTH CARE SERVICES AND
OFFERING AND TERMINATING CONTRACTS TO SUBSCRIBERS MAY NOT
DISCRIMINATE UNFAIRLY ON THE BASIS OF AGE, SEX, RACE,
HEALTH, OR ECONOMIC STATUS. THIS REQUIREMENT DOES NOT
PROHIBIT:

(1)  REASONABLE UNDERWRITING CLASSIFICATIONS FOR

ESTABLISHING CONTRACT RATES; OR

(2)  EXPERIENCE RATING.

(H) INSURANCE.

THE HEALTH MAINTENANCE ORGANIZATION SHALL PROVIDE
EVIDENCE OF ADEQUATE INSURANCE COVERAGE OR AN ADEQUATE PLAN
FOR SELF INSURANCE TO SATISFY CLAIMS FOR INJURIES THAT MAY
OCCUR FROM PROVIDING HEALTH CARE.

(I) AUDIT AND REVIEW.

THE HEALTH MAINTENANCE ORGANIZATION SHALL PROVIDE FOR
HAVING ITS HEALTH AND MEDICAL FACILITIES AND SERVICES
AUDITED AND REVIEWED PERIODICALLY:

(1) BY PERSONNEL OUTSIDE THE HEALTH MAINTENANCE
ORGANIZATION WHO:

(I)  ACT IN A MANNER THAT IS APPROVED BY

THE DEPARTMENT; AND

(II)  USE METHODS THAT WILL ASSURE
OBJECTIVE EVALUATION AND KEEP THE IDENTITY OF PATIENTS AS