(a) Each prepaid limited health service organization must file with the department annually, within three (3) months after the end of its fiscal year, a report on the blank specified for health maintenance organizations by the National Association of Insurance Commissioners, verified by the oath of at least two (2) officers covering the preceding calendar year.
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Terms Used In Tennessee Code 56-51-134

  • Contract: A legal written agreement that becomes binding when signed.
  • Department: means the department of commerce and insurance. See Tennessee Code 56-51-102
  • Fiscal year: The fiscal year is the accounting period for the government. For the federal government, this begins on October 1 and ends on September 30. The fiscal year is designated by the calendar year in which it ends; for example, fiscal year 2006 begins on October 1, 2005 and ends on September 30, 2006.
  • Limited health service: means dental care services, vision care services, mental health services, substance abuse services, and pharmaceutical services. See Tennessee Code 56-51-102
  • Prepaid limited health service organization: means any person, corporation, partnership, or any other entity that, in return for a prepayment from a health maintenance organization or a state or federal agency, undertakes to provide or arrange for, or provide access to, the provision of a limited health service to enrollees through an exclusive panel of providers. See Tennessee Code 56-51-102
  • Qualified independent actuary: means an actuary who is a member of the American Academy of Actuaries or the Society of Actuaries and who has experience in establishing rates for limited health services and who has no financial or employment interest in the prepaid limited health service organization. See Tennessee Code 56-51-102
  • State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
  • Statutory accounting principles: means generally accepted accounting principles, except as modified by this chapter. See Tennessee Code 56-51-102
  • written: includes printing, typewriting, engraving, lithography, and any other mode of representing words and letters. See Tennessee Code 1-3-105
  • Year: means a calendar year, unless otherwise expressed. See Tennessee Code 1-3-105
(b) In addition to the information contained in the forms provided under subsection (a), the report must also include:

(1) A statutory financial statement of the organization prepared in accordance with statutory accounting principles, including its balance sheet, income statement, and statement of changes in cash flow for the preceding year, certified by an independent certified public accountant, or a consolidated audited financial statement of its parent company prepared on the basis of statutory accounting principles, certified by an independent certified public accountant, attached to which must be consolidating financial statements of the parent company, including the prepaid limited health service organization;
(2) A list of the names and residence addresses of all persons responsible for the conduct of its affairs, together with a disclosure of the extent and nature of any contracts or arrangements between the persons and the prepaid limited health service organization, including any possible conflicts of interest;
(3) The number of prepaid limited health services contracts, issued and outstanding, and the number of prepaid limited health services contracts terminated;
(4) The number and amount of damage claims for medical injury initiated against the prepaid limited health service organization, and if known, any of the providers engaged by it during the reporting year, broken down into claims with and without formal legal process, and the disposition, if any, of each damage claim for medical injury;
(5) An actuarial report certified by a qualified independent actuary that:

(A) The prepaid limited health service organization is actuarially sound, which certification shall consider the rates, benefits, and expenses of, and any other funds available for, the payment of obligations of the organization;
(B) The rates being charged or to be charged are actuarially adequate to the end of the period for which rates have been guaranteed; and
(C) Incurred but not reported claims and claims reported but not fully paid have been adequately provided for; and
(6) Other information relating to the performance of the prepaid limited health service organization that is reasonably required by the department.
(c) Every prepaid limited health service organization that fails to file an annual report or quarterly report in the form and within the time required by this section shall forfeit up to five hundred dollars ($500) for each day for the first ten (10) days during which the neglect continues and shall forfeit up to one thousand dollars ($1,000) for each day after the first ten (10) days during which the neglect continues; and, upon notice by the department to that effect, the organization’s authority to enroll new subscribers or to do business in this state ceases while the default continues. The department may not collect more than fifty thousand dollars ($50,000) for each report.
(d) Each authorized prepaid limited health service organization must file a quarterly report for each calendar quarter within forty-five (45) days after the end of the quarter. The report shall be in the form prescribed by the National Association of Insurance Commissioners for health maintenance organizations and shall contain:

(1) A financial statement prepared in accordance with statutory accounting principles;
(2) A listing of providers; and
(3) Other information relating to the performance of the prepaid limited health service organization that is reasonably required by the department.
(e) The department may require monthly reports if the financial condition of the prepaid limited health service organization has deteriorated from previous periods or if the financial condition of the organization is such that it may be hazardous to subscribers if not monitored more frequently.
(f) Each authorized prepaid limited health service organization shall retain an independent certified public accountant, referred to as “CPA,” who agrees by written contract with the prepaid limited health service organization to comply with this chapter. The contract must state that:

(1) The CPA will provide to the prepaid limited health service organization audited statutory financial statements consistent with this chapter;
(2) Any determination by the CPA that the prepaid limited health service organization does not meet minimum surplus requirements as set forth in this chapter will be stated by the CPA, in writing, in the audited financial statement; and
(3) The completed work papers and any written communications between the CPA and the prepaid limited health service organization relating to the audit of the prepaid limited health service organization will be made available for review on a visual-inspection-only basis by the department at the offices of the prepaid limited health service organization, at the department, or at any other reasonable place as mutually agreed between the department and the prepaid limited health service organization. The CPA must retain for review the work papers and written communications for a period of not less than six (6) years.
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