Ch. 754                                          LAWS OF MARYLAND

(3) (I) FOR THE PROTECTION OF THE HEALTH MAINTENANCE
ORGANIZATION'S MEMBERS AND CREDITORS, THE APPLICANT SHALL DEPOSIT
AND MAINTAIN IN TRUST WITH THE STATE TREASURER $100,000 IN CASH
OR GOVERNMENT SECURITIES OF THE TYPE DESCRIBED IN ARTICLE 48A, §
110.

(II) 1. THE DEPOSITS SHALL BE ACCEPTED AND HELD
IN TRUST BY THE STATE TREASURER IN ACCORDANCE WITH THE PROVISIONS
OF ARTICLE 48A, §§ 108 THROUGH 118.

2. FOR THE PURPOSE OF APPLYING THIS
SUBPARAGRAPH, A HEALTH MAINTENANCE ORGANIZATION SHALL BE TREATED
AS AN INSURER.

(3) (4) The Commissioner may waive the stock or
surplus AND DEPOSIT 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.

(e)  The terms of contracts, including any medical
assistance program contracts under Title XVIII or Title XIX 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)  (1) 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.

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