2016 Tennessee Code
Title 56 - Insurance
Chapter 32 - Health Maintenance Organization Act of 1986
§ 56-32-104. Issuance of certificate of authority.

(a) Issuance of a certificate of authority shall be granted upon payment of the application fee prescribed in § 56-32-119, if the commissioner is satisfied that the following conditions are met:

(1) Persons responsible for the conduct of the affairs of the applicant are competent, trustworthy and possess good reputations;

(2) The HMO will effectively provide or arrange for the provision of basic health care service on a prepaid basis through insurance or otherwise, except to the extent of reasonable enrollee cost sharing requirements such as copayments, deductibles or coinsurance; provided, however, that for basic health care services through participating network providers, the amount of coinsurance paid by the enrollee shall not exceed twenty percent (20%);

(3) The HMO is financially responsible, and may reasonably be expected to meet its obligations to enrollees and prospective enrollees. In making this determination, the commissioner may consider:

(A) The financial soundness of the arrangements for health care services in the schedule of charges used in connection with the health care service;

(B) The adequacy of working capital;

(C) Any agreement with an insurer, a hospital medical services corporation, a government, or any other organization for insuring the payment of cost for health care services or the provisions for automatic applicability of an alternative coverage in the event of discontinuance of the HMO;

(D) Any agreement with providers for the provision of health care services;

(E) In the event the HMO enters into an agreement with any physician-hospital organization, or any other provider, provider group, or provider network, for the provision of healthcare services on a prepayment basis or other risk sharing basis, the commissioner may not disallow the agreement on the basis that it transfers risk to the physician-hospital organization or other provider, provider group or provider network; or transfers the risk of payment for services to the physician-hospital organization or other provider, provider group or provider network; provided, that the HMO shall:

(i) Remain contractually responsible to its enrollees;

(ii) Enter into contractual arrangements utilizing contract provisions and arrangements that ensure compliance with applicable federal law, rule, regulation or waivers, including federal requirements; and

(iii) Assure the physician-hospital organizations, providers, provider groups, or provider networks that are at substantial financial risk obtain either aggregate or per-patient stop-loss protection insurance coverage for the healthcare services included in the scope of the arrangement; or the HMO remains contractually responsible to the subcontracted providers and provides a system for reserving for its continued liability; and

(F) Any deposit of cash or security submitted in accordance with § 56-32-112; and

(4) Nothing in the proposed method of operation, as shown by the information submitted pursuant to § 56-32-103, or by independent investigation, is contrary to the public interest.

(b) A certificate of authority shall be denied only after compliance with the requirements of § 56-32-118.