2012 Pennsylvania Consolidated Statutes
Title 40 - INSURANCE
Chapter 61 - Hospital Plan Corporations
Section 6124 - Rates and contracts

     § 6124.  Rates and contracts.
        (a)  General rule.--The rates charged to subscribers by
     hospital plan corporations, all rates of payments to hospitals
     made by such corporations pursuant to the contracts provided for
     in this chapter, all acquisition costs in connection with the
     solicitation of subscribers to such hospital plans, the reserves
     to be maintained by such corporations, the certificates issued
     by such corporations representing their agreements with
     subscribers, and any and all contracts entered into by any such
     corporation with any hospital, shall, at all times, be subject
     to the prior approval of the department.
        (b)  Procedure.--Every application for such approval shall be
     made to the department in writing and shall be subject to the
     provisions of subsections (c) through (f) of section 6102 of
     this title (relating to certification of hospital plan
     corporations) except that the department may substitute
     publication in the Pennsylvania Bulletin of notice of reasonable
     opportunity to submit written comments for publication of
     opportunity for hearing in any case where the right to an oral
     hearing is not conferred by the Constitution of the United
     States or the Constitution of Pennsylvania. Within 60 days after
     the filing of the application the department shall approve or
     refuse such application.
        (c)  Maintenance of contractual relationships.--
            (1)  Declaration of necessity.--It is hereby found that
        many subscribers to nonprofit hospital plans make payments
        over long periods of time prior to becoming entitled to
        benefits under such a plan and that it is important in the
        public interest that the reasonable expectations of such
        subscribers as to coverage should be fulfilled if possible.
        It is hereby declared to be essential for the maintenance of
        the health of the residents of this Commonwealth that
        subscribers to nonprofit hospital plans be assured receipt of
        the hospitalization and related health benefits prepaid by
        them through payment of the rates approved under this chapter
        and charged by a hospital plan corporation and that to
        accomplish this essential purpose termination of contracts
        between hospital plan corporations and hospitals entered into
        pursuant to section 6121 (relating to eligible hospitals) and
        this section be subject to prior approval by the department
        as provided in this subsection.
            (2)  Notification period.--No contract between a hospital
        plan corporation and any hospital providing for the rendering
        of hospitalization to subscribers to the hospital plan shall
        be terminated unless the party seeking such termination gives
        90 days advance written notice to the other party to the
        contract and to the department of the proposed termination.
            (3)  Hearing period.--Whenever a termination subject to
        paragraph (2) involves contracts with hospitals having more
        than 5% of the beds in the area served by a hospital plan
        corporation, the department shall hold public hearings on at
        least 15 days notice for the purpose of investigating the
        reasons for the termination. Pending completion of said
        investigation by the department, termination of the hospital
        contracts shall be suspended for a period not to exceed six
        months from the expiration of the period provided for in
        paragraph (2). All terms and conditions of the contract
        between the hospital plan corporation and the hospital or
        hospitals shall continue in full force and effect during said
        investigation by the department. Based on the record made
        during the hearings, the department shall make specific
        findings as to the facts of the dispute and shall either
        approve termination of the contracts or recommend such terms
        for continuation of the contract as are in the public
        interest, based upon the facts, the right of a hospital to be
        paid its costs for hospitalization services to subscribers
        and the need of subscribers for efficient, reliable
        hospitalization at a reasonable cost.
            (4)  Negotiation period.--If the department recommends
        terms for continuation of the contract, the hospital plan
        corporation and the hospitals involved shall renew their
        negotiations in order to determine whether a new agreement
        can be reached substantially on the basis of the terms for
        continuation recommended by the department and pending such
        negotiations, the termination of the hospital contracts shall
        be suspended for a further period not to exceed 90 days from
        the date of the decision of the department. If the hospital
        plan corporation and the hospitals are unable to consummate a
        new contract within said further period of 90 days, they
        shall so advise the department. The department shall in that
        event approve termination of the contracts effective at the
        end of a further period of 30 days and shall prescribe the
        form and extent of notice which the hospital plan corporation
        shall use in advising its subscribers that hospitalization in
        the hospitals involved is not covered by a contract between
        the hospital plan corporation and such hospitals.
            (5)  Retroactivity.--Upon the settlement of any dispute
        between a hospital plan corporation and any hospital pursuant
        to paragraphs (2) and (4), the terms and conditions of any
        new contract shall be retroactive to the date of expiration
        of the contract previously in effect between the parties.
     (Aug. 2, 1975, P.L.293, No.94, eff. imd.)

        1996 Partial Repeal.  Section 14 of Act 159 of 1996, known as
     the Accident and Health Filing Reform Act, provided that subsec.
     (a) is repealed insofar as it provides for the approval of rates
     and contracts.
        1975 Amendment.  Act 94 added subsec. (c). See sections 2 and
     3 of Act 94 of 1975 in the appendix to this title for special
     provisions relating to applicability and effective date and
     retroactivity.