2890                                        LAWS OF MARYLAND                                    Ch. 555

(d)(1) The health maintenance organization shall be
actuarially sound . and have an adequate tangible net worth.
These requirements may be satisfied by a finding that the health
maintenance organization has [made acceptable arrangements to
provide all or stipulated parts of health care services that it
offers] A READILY ACCESSIBLE POSITIVE NET RESERVE OF $250,000.

(2) (I) EXCEPT AS OTHERWISE PROVIDED IN THIS
PARAGRAPH, THE STOCK OR SURPLUS THAT THE HEALTH MAINTENANCE
ORGANIZATION IS REQUIRED TO HAVE SHALL BE PAID IN FULL.

(II) THE HEALTH MAINTENANCE ORGANIZATION SHALL
HAVE STOCK OR SURPLUS THAT EXCEEDS THE LIABILITIES OF THE HEALTH
MAINTENANCE ORGANIZATION BY EITHER $100,000 OR 5 PERCENT OF THE
SUBSCRIPTION CHARGES EARNED DURING THE PRIOR CALENDAR YEAR AS
RECORDED IN THE ANNUAL REPORT FILED BY THE HEALTH MAINTENANCE
ORGANIZATION WITH THE COMMISSIONER.

(III) NO HEALTH MAINTENANCE ORGANIZATION SHALL
BE REQUIRED TO MAINTAIN A STOCK OR SURPLUS IN EXCESS OF A VALUE
OF $1,000,000.

(3) THE COMMISSIONER MAY WAIVE THE STOCK OR SURPLUS
REQUIREMENTS CONTAINED IN THIS SUBSECTION IF THE COMMISSIONER IS
SATISFIED THAT:

(I) THE HEALTH MAINTENANCE ORGANIZATION HAS
SUFFICIENT NET WORTH AND AN ADEQUATE HISTORY OF GENERATING NET
INCOME TO ASSURE FINANCIAL VIABILITY FOR THE NEXT YEAR;

(II) THE HEALTH MAINTENANCE ORGANIZATION'S
PERFORMANCE AND OBLIGATIONS ARE GUARANTEED BY ANOTHER PERSON WITH
SUFFICIENT NET WORTH AND AN ADEQUATE HISTORY OF GENERATING NET
INCOME; OR

(III) THE ASSETS OF THE HEALTH MAINTENANCE
ORGANIZATION OR CONTRACTS WITH INSURERS, GOVERNMENTS, PROVIDERS,
OR OTHER PERSONS ARE SUFFICIENT TO REASONABLY ASSURE THE
PERFORMANCE OF THE HEALTH MAINTENANCE ORGANIZATION'S OBLIGATIONS.

SECTION 2. AND BE IT FURTHER ENACTED, That, except as
provided below, the provisions of this Act shall apply only to
health maintenance organizations that are certified by the
Insurance Commissioner on or after the effective date of this

Act.

SECTION 3. AND BE IT FURTHER ENACTED, That any health
maintenance organization certified by the Insurance Commissioner
prior to the effective date of this Act shall show a readily
accessible positive net reserve as follows: effective July 1,
1984, $50,000; effective July 1, 1985, $100,000; effective July

1, 1986, $150,000, effective July 1, 1987, $200,000, and

effective July 1, 1988, $250,000 maintain stock or surplus as