Michigan Laws 500.3551 – Health maintenance organization; net worth
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Terms Used In Michigan Laws 500.3551
- Contract: A legal written agreement that becomes binding when signed.
- Director: means , unless the context clearly implies a different meaning, the director of the department. See Michigan Laws 500.102
- Health maintenance organization: means a person that, among other things, does the following:
(i) Delivers health services that are medically necessary to enrollees under the terms of its health maintenance contract, directly or through contracts with affiliated providers, in exchange for a fixed prepaid sum or per capita prepayment, without regard to the frequency, extent, or kind of health services. See Michigan Laws 500.3501state: when applied to the different parts of the United States, shall be construed to extend to and include the District of Columbia and the several territories belonging to the United States; and the words "United States" shall be construed to include the district and territories. See Michigan Laws 8.3o
(1) A health maintenance organization shall determine its minimum net worth using accounting procedures approved by the director. The accounting procedures must ensure that a health maintenance organization is financially and actuarially sound.
(2) To obtain or maintain a certificate of authority in this state, a health maintenance organization shall possess and maintain unimpaired net worth in an amount determined adequate by the director to continue to comply with section 403 but not in an amount less than the following, as applicable:
(a) For a health maintenance organization that contracts with or employs providers in numbers sufficient to provide 90% of the health maintenance organization’s benefit payout, minimum net worth is the greatest of the following:
(i) $1,500,000.00.
(ii) Four percent of the health maintenance organization’s subscription revenue.
(iii) Three months’ uncovered expenditures.
(b) For a health maintenance organization that does not contract with or employ providers in numbers sufficient to provide 90% of the health maintenance organization’s benefit payout, minimum net worth is the greatest of the following:
(i) $3,000,000.00.
(ii) Ten percent of the health maintenance organization’s subscription revenue.
(iii) Three months’ uncovered expenditures.
(3) The director shall take into account the risk-based capital requirements as developed by the National Association of Insurance Commissioners in order to determine adequate compliance with section 403 under this section.