# COMAR Title 31 — Maryland Insurance Administration

## Subtitle 12 — Health Maintenance Organizations; Entities That Act as Health Insurers

### Chapter 01 — Health Maintenance Organizations — Certificate of Authority and Fiscal Requirements

**Authority:** Health-General Article, §§19-705(a), 19-707, 19-708, 19-710, and 19-728, Annotated Code of Maryland

**Administrative History:** Effective date: October 1, 1977 (4:18 Md. R. 1422)

**Administrative History:** Regulation .02A and C amended effective August 5, 1991 (18:15 Md. R. 1725)

**Administrative History:** Regulation .02D—F adopted effective August 5, 1991 (18:15 Md. R. 1725)

**Administrative History:** Regulation .02D amended effective November 9, 1992 (19:22 Md. R. 1988)

**Administrative History:** Regulation .04G, H, and K amended effective August 5, 1991 (18:15 Md. R. 1725)

**Administrative History:** Regulation .04K adopted effective June 29, 1987 (14:13 Md. R. 1472)

**Administrative History:** Regulation .10 amended effective August 5, 1991 (18:15 Md. R. 1725)

**Administrative History:** Regulation .12B amended effective August 5, 1991 (18:15 Md. R. 1725)

**Administrative History:** Regulation .13C amended effective August 5, 1991 (18:15 Md. R. 1725)

**Administrative History:** Chapter recodified from COMAR 09.30.54 to COMAR 31.12.01 effective September 7, 1998 (25:18 Md. R. 1439)

**Administrative History:** Regulation .08 repealed effective October 10, 2005 (32:20 Md. R. 1657)

**Administrative History:** Regulation .10 repealed effective October 10, 2005 (32:20 Md. R. 1657)

**Administrative History:** Regulation .12A amended effective April 2, 2012 (39:6 Md. R. 412)

**Administrative History:** Regulation .13 repealed effective October 10, 2005 (32:20 Md. R. 1657)

#### Regulation .01 Authority and Purpose.

*COMAR 31.12.01.01*

The Insurance Commissioner adopts and promulgates this chapter according to Health-General Article, §19-705, Annotated Code of Maryland, for the purpose of governing and regulating various phases of the operations of health maintenance organizations.

#### Regulation .02 Definitions.

*COMAR 31.12.01.02*

A. All terms defined in the Health Maintenance Organization Act of 1975 which are used in this chapter have the same meaning as in the Act unless the terms are defined differently in this chapter.

B. Terms Defined.

  (1) “HMO” means a health maintenance organization.

  (2) “Individual contract” means a contractual agreement for the provision of health care services on a prepaid basis entered into between an HMO and a subscriber, provided the contract covers only the following persons:

    (a) The subscriber;

    (b) The subscriber and the subscriber's dependents; or

    (c) The subscriber's dependents.

  (3) “Leasehold estate improvements” means improvements made to property which is leased by the HMO and used by it to provide health care directly.

  (4) “Member” means the subscriber and any of the subscriber's dependents who are enrolled in the HMO.

  (5) “Subscriber” means, for:

    (a) Group HMO contracts, the person who is eligible to be covered under the contract, other than as a dependent, due to satisfaction of the eligibility requirements of the group; and

    (b) Individual HMO contracts, the person who completes the application for coverage with the HMO.

#### Regulation .03 Scope.

*COMAR 31.12.01.03*

The scope of this chapter is the scope of Health-General Article, Title 19, Subtitle 7, Annotated Code of Maryland, as it relates to the Insurance Commissioner.

#### Regulation .04 Application for Certificate of Authority.

*COMAR 31.12.01.04*

A. The Act provides that an HMO may not engage in business as an HMO unless so authorized under a certificate of authority issued by the Insurance Commissioner.

B. Application for a certificate of authority shall be submitted by the HMO not less than 90 days before the date it proposes to engage in business in this State.

C. An application form will be furnished by the Commissioner on the request of the HMO.

D. Each health maintenance organization, as defined in Health-General Article, §19-701(e), Annotated Code of Maryland, seeking a certificate of authority to transact business in Maryland shall file the following items:

  (1) A copy of the basic organizational document of the HMO and any amendments to it, certified if applicable, by the Department of Assessments and Taxation.

  (2) A copy of the HMO's current bylaws, if any, certified by the appropriate officer of the HMO.

  (3) A list of the names, addresses, and official capacity with the HMO of the persons who are to be responsible for the conduct of its affairs, including all members of the governing body, the officers and directors in the case of a corporation, and the partners or associates in the case of a partnership or association. These persons shall disclose fully to the Commissioner and the governing body of the HMO the extent and nature of any contracts or arrangements between them and the HMO, including any possible conflicts of interest.

  (4) A resume of the qualifications of the administrator, the medical director, the enrollment director, and of other persons associated with the HMO as requested by the Commissioner and the Maryland Department of Health.

  (5) A statement generally describing the:

    (a) HMO;

    (b) HMO's operations;

    (c) HMO's enrollment process;

    (d) HMO's quality assurance mechanism;

    (e) HMO's internal grievance procedures;

    (f) Methods the HMO proposes to use to offer its members or public representatives an opportunity to participate in matters of policy and operation;

    (g) Location of the facilities at which health care services will be regularly available to members;

    (h) Type and specialty of physicians and health care personnel engaged to provide health care services;

    (i) Number of physicians and personnel in each category;

    (j) Health and medical records system to provide documentation of utilization by members.

  (6) Forms of all health maintenance contracts the HMO proposes to offer to subscribers showing the benefits to which they are entitled, together with a table of the rates charged, or proposed to be charged, for each form of contract.

  (7) A statement describing with reasonable certainty the geographic area or areas to be served by the HMO.

  (8) A certified statement of the financial condition of the HMO, including:

    (a) Sources of financial support;

    (b) Assets and liabilities and minimum tangible net equity;

    (c) Other financial information the Commissioner requires for adequate financial evaluation.

  (9) Copies of proposed advertising and proposed techniques and methods of marketing the services of the HMO.

  (10) A power of attorney duly executed by the HMO appointing the Commissioner and his duly authorized deputies, as the true and lawful attorney of the HMO in and for the State upon whom may be served all lawful process in any action, proceeding, or cause of action arising in this State against the HMO.

  (11) A certificate of compliance evidencing employee coverage under Workers' Compensation law (Labor and Employment Article, Title 9, Annotated Code of Maryland).

  (12) An official written notification from the Maryland Department of Health that the HMO's proposed health-related services, operations, and functions falling under the regulatory jurisdictions of the Department appear to meet its requirements and have been approved by the Department in accordance with its regulations.

E. Insurance—General Liability and Medical Malpractice. Evidence of insurance or a plan for self-insurance shall be presented and approved by the Commissioner both as to amounts and type of coverage before the HMO is licensed. Evidence of renewal shall be submitted with each annual report.

F. Fiscal Requirements.

  (1) In order to qualify for a certificate of authority, the HMO shall at the time of making its initial application demonstrate to the satisfaction of the Commissioner that:

    (a) The HMO has on hand sufficient funds or a reasonably certain source of income to meet all organizational, administrative, promotional, and marketing expenses incurred or expected to be incurred before opening;

    (b) On its date of opening, the HMO will have a net worth sufficient to cover all expenses which may reasonably be anticipated will be incurred during the first month of operation, and on that date the HMO will have cash on hand or on deposit at least equal to the anticipated expenses;

    (c) The HMO can anticipate with reasonable certainty that its cash flow plus funds already on hand will be sufficient to meet all expenses which it anticipates will be incurred on an accrual basis during the first 3 months of operation; and

    (d) The HMO has a prospective budget and expected cash flow analysis for the first 24 months of its anticipated operation demonstrating its financial viability based on reasonable assumptions.

  (2) For purposes of this regulation, amounts due and payable to the HMO directly or indirectly under contracts with federal, State, or local governmental agencies or with any of their instrumentalities may be regarded as an asset on the date the amounts become due and payable and any amounts becoming due within the first month of operation may be included in net worth or be considered as funds on hand or a part of the HMO's cash flow for purposes of §F(1)(b) and (c) of this regulation.

  (3) If the HMO has received a loan, other than a first mortgage loan on real estate, fixtures, chattels, and equipment, from a State or national bank, and, if under the terms of the loan agreement the loan is subordinated to the rights of enrollees under the benefit provisions of their subscription agreements, the HMO may, for purposes of this regulation, take credit as income for up to 75 percent of the outstanding balance of the loan which is neither due nor callable before 1 year from the date the credit is taken. This credit may be taken only if, based on the cash flow analysis, all amounts falling due or becoming callable under the loan agreement may reasonably be expected to be available from the operation of the HMO on or before the respective due dates of amounts payable or callable under the loan agreement. Any interest accruing on the loan shall be treated as a current expense during each month of the HMO's budget and cash flow analysis.

  (4) Exceptions in whole or in part as to the fiscal requirements of this regulation may be made by the Commissioner in the Commissioner's discretion for such periods as the Commissioner determines if:

    (a) The HMO is funded primarily or substantially under programs sponsored by federal, State, or local governmental agencies or their instrumentalities, or by well established and reputable foundations for demonstration or charitable purposes, or by organizations except under §§501(c)(3) and 501(c)(4) of the Internal Revenue Code;

    (b) The HMO has contracts with its provider physicians and hospitals under which the providers agree to continue furnishing their services for a stated period (not less than 30 days) even if the revenues of the HMO are insufficient to pay the providers for their services; or

    (c) The HMO has an agreement with a Maryland licensed insurer or nonprofit health service plan under which the insurer or plan agrees to issue to enrollees in the HMO standard forms of hospital, medical, and surgical insurance at standard premium rates without any underwriting or other requirement other than an application and payment of the first monthly premium by the enrollee if the HMO is unable to continue in operation.

G. Determination of Financial Condition. In any determination of the financial condition of any HMO, there shall be allowed as assets only the following:

  (1) Cash in the possession of the HMO or in transit under its control, and the balance of any deposit of the HMO in a solvent bank or trust company;

  (2) Investments, securities, properties, and loans acquired or held in accordance with this regulation and income due or accrued thereon;

  (3) Member charges in the course of collection, not more than 90 days past due (the foregoing limitation does not apply to amounts payable directly or indirectly by federal, State, or local governmental agencies or their instrumentalities);

  (4) Notes and like written obligations not past due, taken for member charges or contracts permitted to be issued on that basis, to the extent of the unearned charges reserve carried thereon;

  (5) Medical, surgical, and dental equipment directly used to provide health care;

  (6) Prepaid charges on contracts with other organizations, hospitals, or other persons as approved by the Commissioner;

  (7) Pharmaceutical and medical supply inventories; accounts receivable for health care provided, not including notes receivable, less adequate reserves for bad debts;

  (8) Cost of land and depreciated cost of buildings owned and occupied by the HMO and used to directly provide health care, in excess of any encumbrances on it;

  (9) Leasehold estate improvements, provided the initial cost is amortized over the useful life of the improvements but not beyond the termination of the lease;

  (10) Federal funds may be counted as assets as approved by the Commissioner for that fiscal year in which funds are committed, awarded, or otherwise made available;

  (11) Electronic, mechanical, and computer hardware including the operating system software used for data processing and accounting purposes, the cost of which shall be amortized in full over a period not to exceed 10 calendar years; and

  (12) Other assets, not inconsistent with the foregoing provisions, deemed by the Commissioner available for the provision of health care, at values to be determined by the Commissioner.

H. The following may not be allowed as assets in determination of the financial condition of an HMO:

  (1) Good will, trade names, and other like intangible assets;

  (2) Advances to officers, whether secured or not, and advances to employees, agents, and other persons on personal security only;

  (3) Stock of the HMO, owned by it, or any equity in it or loans secured by it, or any proportionate interest in the stock through the ownership by the HMO or an interest in another firm, corporation, or business unit;

  (4) The amount, if any, by which the aggregate book value of investments as carried in the ledger assets of the HMO exceeds the aggregate value thereof as determined by the values approved annually by the Securities Valuation Office of the National Association of Insurance Commissioners;

  (5) All assets not allowed and all other assets of doubtful value or character included in any statement by an HMO to the Commissioner, or in any examiner's report to the Commissioner, shall also be reported to the extent of the value disallowed, as deductions from the gross assets of the HMO;

  (6) Furniture and fixtures, leasehold improvements other than leasehold estate improvements which qualify under §G(9) of this regulation, vehicles, and maintenance equipment.

I. Liabilities Chargeable Against Assets. In any determination of the financial condition of an HMO, liabilities to be charged against its assets shall include:

  (1) The amount of its capital stock outstanding, if any;

  (2) The estimated amount necessary to pay for all accrued benefits to enrollees and all claims, both reported or unreported, incurred on or before the date of the statement, together with estimated costs of adjusting or settling disputed claims;

  (3) The pro rata amount of premium charges paid by or on behalf of enrollees for any period of coverage beyond the date of the statement; and

  (4) Its other liabilities, including but not limited to taxes, expenses, and other obligations due or accrued at the date of the statement.

J. Earned Charges.

  (1) Earned charges shall include premium charges on all contracts written, including all determined excess and additional charges, less return charges, less charges returned or credited to members as dividends, and less charges on cancelled contracts, and less unearned charges on contracts in force as shown by the HMO's annual statement. Every HMO shall maintain an unearned charge reserve on all health care contracts in force, which reserve shall be set up as a liability. All prepaid charges shall be deemed unearned.

  (2) “Charges” means the consideration for health services by whatever name called. Any “assessment”, or any “membership”, “policy”, “survey”, “inspection”, “service”, or similar fee or charge in consideration for an HMO contract is deemed part of the charge.

K. Deposit of Securities.

  (1) The Insurance Commissioner may not issue or renew a certificate of authority for any HMO unless it has deposited and maintains in trust with the State Treasurer, for the protection of its members or its members and creditors, cash or government securities of the type described in Insurance Article, §5-701(b), Annotated Code of Maryland, in the amount of $100,000.

  (2) The Insurance Commissioner may, in the Commissioner's discretion, waive the requirement for deposit of securities for any HMO which is domiciled in a state other than Maryland if that state has a security deposit greater than that of Maryland, provided that the deposit is for the benefit of all of the subscribers of that HMO including all Maryland residents.

  (3) In determining whether to waive the requirement for deposit of securities, the Commissioner shall consider, but not be limited to, the following factors:

    (a) The number of states in which the HMO is licensed to operate;

    (b) The number of states in which the HMO has deposited securities; and

    (c) Whether the residents of states other than Maryland have priority over nonresidents to the securities deposited in their states.

  (4) This security deposit requirement does not apply to any HMO operating solely under contracts with the Maryland Medical Assistance Programs pursuant to Title XIX of the Social Security Act, 42 U.S.C. §1396 et seq.

  (5) The Insurance Commissioner may, in his discretion, waive the requirement for deposit of securities for any HMO, which is domiciled in Maryland or a state other than Maryland, if the Insurance Commissioner is satisfied that the deposit is not necessary to protect the members or creditors of that HMO.

#### Regulation .05 Change of Ownership.

*COMAR 31.12.01.05*

The HMO shall notify the Commissioner within 10 days of any transfer of ownership or more than an aggregate of 10 percent of the stock or ownership interest in the HMO occurring during any 12-month period.

#### Regulation .06 Change of Name.

*COMAR 31.12.01.06*

No name other than that approved by the Commissioner may be used. The name of the HMO may not be changed without prior approval of the Commissioner.

#### Regulation .07 Filings, Forms, and Rates.

*COMAR 31.12.01.07*

HMOs shall be subject to the applicable procedures and requirements for filings, forms, and rates as outlined in COMAR 31.12.02.

#### Regulation .08 Repealed.

*COMAR 31.12.01.08*

#### Regulation .09 Marketing.

*COMAR 31.12.01.09*

The manner of marketing health care contracts shall be fully set forth in writing by the HMO before licensing, and any substantive alterations in marketing procedures must be approved by the Commissioner before use.

#### Regulation .10 Repealed.

*COMAR 31.12.01.10*

#### Regulation .11 Annual Report.

*COMAR 31.12.01.11*

A. Each licensed health maintenance organization, unless the time is extended for good cause shown, shall file a report with the Commissioner, certified by an audit of a certified public accounting firm, showing its financial condition on the last day of the preceding calendar year. The report shall be on the form adopted by the Commissioner and shall annually be filed with the Commissioner on or before the first day of March. The report shall be supplemented with a description of any changes in the information submitted with the last previous annual report or with the HMO's original application for a certificate of authority.

B. If the fiscal year of the HMO does not coincide with the calendar year, at the request of the HMO the Commissioner may, in his discretion, accept a certified audit showing the HMO's financial condition at the end of its last completed fiscal year, the audit to be accomplished by an annual report for the corresponding fiscal year to be filed on or before the 60th day following the last day of the fiscal year. As a condition for granting this exception, the Commissioner will require the HMO to also file on or before the first day of the following March an unaudited calendar year report.

#### Regulation .12 Fiscal Examination.

*COMAR 31.12.01.12*

A. The Commissioner may make an examination of the operation of any health maintenance organization as often as the Commissioner deems necessary for the protection of the interest of the people of Maryland, but the examinations may not be less frequent than once every 5 years.

B. The expense of each examination shall be assessed against the HMO being examined and the HMO shall remit the cost of the examination to the Commissioner.

#### Regulation .13 Repealed.

*COMAR 31.12.01.13*

#### Regulation .14 Insurance — Catastrophic or Back-Up Coverage.

*COMAR 31.12.01.14*

A. Unless the Commissioner grants an exemption from the requirements of this section, the HMO shall secure insurance coverage to provide:

  (1) Payments or services required to be made or furnished under the health care contract to those enrollees who are injured or become ill outside the geographic limits served by the HMO; and

  (2) Reinsurance protection to the HMO in event of catastrophic or unusual losses which would be in excess of the levels of loss which the HMO assumes in the basis of its calculation of premium charges.

B. Any exemption to requirements of §A of this regulation shall be for a period of 1 year, and may be renewed from year to year thereafter. Any requests for renewal shall be made by the HMO at least 90 days before the expiration date of the then current exemption.

C. With the approval of the Commissioner, the HMO may reinsure any portion or aspect of its operation.

### Chapter 02 — Health Maintenance Organizations — Contract Forms and Premium Rates

**Authority:** Health-General Article, Title 19, Subtitle 7; Insurance Article, §§2-109 and 15-122; Annotated Code of Maryland

**Administrative History:** Effective date: October 1, 1977 (4:18 Md. R. 1426)

**Administrative History:** Regulation .01 amended effective April 1, 1991 (18:6 Md. R. 684)

**Administrative History:** Regulation .02 amended effective April 1, 1991 (18:6 Md. R. 684)

**Administrative History:** Regulation .04 amended effective April 1, 1991 (18:6 Md. R. 684)

**Administrative History:** Chapter recodified from COMAR 09.30.55 to COMAR 31.12.02 effective September 7, 1998 (25:18 Md. R. 1439)

**Administrative History:** Regulation .04H amended effective January 9, 2000 (26:27 Md. R. 2018)

**Administrative History:** Chapter revised effective October 10, 2005 (32:10 Md. R. 1657)

**Administrative History:** Regulation .07B amended effective May 17, 2010 (37:10 Md. R. 724)

#### Regulation .01 Authority and Purpose.

*COMAR 31.12.02.01*

The Insurance Commissioner promulgates this chapter pursuant to Health-General Article, Title 19, Subtitle 7, Annotated Code of Maryland, for the purpose of governing and regulating various phases of the operations of health maintenance organizations.

#### Regulation .02 Definitions.

*COMAR 31.12.02.02*

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

  (1) “Advertising” means:

    (a) Printed and published material;

    (b) Descriptive literature and sales aids;

    (c) Sales talks;

    (d) Sales materials, booklets, forms, pamphlets, brochures, illustrations, depictions, and form letters;

    (e) Newspaper, radio, television, or direct mail advertising; and

    (f) Any other material used for the promotion of enrollment.

  (2) “Carrier” means:

    (a) An HMO;

    (b) An insurer;

    (c) A nonprofit health service plan;

    (d) A dental plan organization; or

    (e) A fraternal benefit society.

  (3) Contract on an Insert Page Basis.

    (a) “Contract on an insert page basis” means a contract that is composed of insert pages, with each insert page being identified with a unique form number.

    (b) “Contract on an insert page basis” does not include a contract that contains an insert that is identified with a unique form number and is longer than one page.

  (4) Contract on a Sectional Basis.

    (a) “Contract on a sectional basis” means a contract that is composed of sections, with each section being identified with a unique form number.

    (b) “Contract on a sectional basis” includes a contract that contains sections that are only one page long.

  (5) Form.

    (a) “Form” means:

      (i) A policy;

      (ii) A contract;

      (iii) A certificate;

      (iv) A rider;

      (v) An endorsement; or

      (vi) An application.

    (b) “Form” does not include a provider contract.

  (6) “Group certificate” means the description of benefits and rights which pertain to the members covered under a group policy.

  (7) “Group contract” or “group policy” means a contractual agreement entered into between an HMO and an employer, union, trustee, association, or organization for the provision of health care services on a prepaid basis to:

    (a) Subscribers; or

    (b) Subscribers and the subscriber's dependents, family members, or both.

  (8) “HMO” means a health maintenance organization.

  (9) “Individual contract” means a contractual agreement for the provision of health care services on a prepaid basis entered into between an HMO and a subscriber, provided the contract covers only the following persons:

    (a) The subscriber;

    (b) The subscriber and the subscriber's dependents, family members, or both; or

    (c) The subscriber's dependents, family members, or both.

  (10) “Member” means the subscriber and any of the subscriber's dependents or family members who are entitled to receive health care benefits from the HMO.

  (11) “Subscriber” means for:

    (a) Group contracts, the person who is eligible to be covered under the contract, other than as a dependent or a family member by reason of satisfying the eligibility requirements of the group contract; and

    (b) Individual contracts, the person who completes the application for coverage with the HMO and who is covered under the contract.

#### Regulation .03 Submittals.

*COMAR 31.12.02.03*

A. Submittals of Forms to Commissioner.

  (1) An HMO shall submit to the Commissioner for approval every form that it intends to use in Maryland.

  (2) The Commissioner shall either approve or disapprove the form for use within 60 days of the receipt of the form in the Commissioner's office.

  (3) An HMO may not use a form before the Commissioner's approval unless the Commissioner has not acted at the end of the 60-day period described in §A(2) of this regulation.

  (4) The Commissioner may withdraw the Commissioner's prior approval or may disapprove a form previously permitted to be used if the Commissioner gives the HMO at least 30 days' notice before the effective date of the Commissioner's action disapproving the form.

B. Duplicate Forms Required For Nonelectronic Form Submissions.

  (1) An HMO shall submit duplicate copies of each nonelectronic form the HMO intends to use in Maryland to the Commissioner for approval.

  (2) If the Commissioner approves the nonelectronic form submitted by or on behalf of the HMO, the Commissioner shall:

    (a) Retain one copy; and

    (b) Return to the HMO one copy, with an appropriate notation indicating approval.

C. Each form submitted for approval shall be accompanied by:

  (1) A current transmittal form developed by:

    (a) The Maryland Insurance Administration; or

    (b) The National Association of Insurance Commissioners (NAIC);

  (2) A filing fee in accordance with Insurance Article, §2-112, Annotated Code of Maryland;

  (3) Except for electronic form filings, a self-addressed, stamped envelope; and

  (4) A cover letter listing the forms submitted for approval by form number, with a brief description of each form filed for approval.

D. The HMO may not use a form disapproved by the Commissioner.

E. If a printed form has been disapproved, the HMO may resubmit the form with modifications made by imprinting, multigraph, mimeograph, multilith, electronic printer, or rubber stamp. The HMO may not resubmit a form with handwritten or typewritten changes, interlineations, or deletions.

F. Submission of Forms.

  (1) Except as provided in §F(2) of this regulation, an HMO shall submit forms for approval with the Commissioner.

  (2) A third party may submit a form for approval on behalf of an HMO, if the third party includes a written authorization from the HMO to make the form filing.

G. Representative Specimen Data. Except for applications filed for approval, an HMO shall complete each form filed for approval with representative specimen data.

H. Contracts with Insert Pages.

  (1) An HMO may file for approval of a contract on an insert page basis, only if:

    (a) Each insert page is identified by a unique form number appearing in the lower left corner of the insert page; and

    (b) The HMO includes the following information in the filing submission:

      (i) A description of how the various insert pages will be combined;

      (ii) A listing of the insert pages that can be substituted for other specific insert pages; and

      (iii) The filing fee required under Insurance Article, §2-112, Annotated Code of Maryland, for each insert page with a unique form number.

  (2) An HMO may not file for approval of insert pages for use with a previously approved contract, if the previously approved contract was not approved on an insert page basis.

  (3) If an HMO files for approval of insert pages for a previously approved contract, the submission shall:

    (a) Identify by form number and date of approval any insert pages that the new insert pages will replace; and

    (b) Include a copy of the currently approved contract, unless the Commissioner waives the requirement or determines that a copy is not necessary to review the submission.

I. Contracts Comprised of Sections.

  (1) An HMO may file for approval of a contract on a sectional basis, only if:

    (a) Each section is identified by a unique form number appearing in the lower left corner of the first page of the section; and

    (b) The HMO includes the following information in the filing submission:

      (i) A description of how the various sections will be combined;

      (ii) A listing of the sections that can be substituted for other specific sections; and

      (iii) The filing fee required under Insurance Article, §2-112, Annotated Code of Maryland, for each section with a unique form number.

  (2) An HMO may not file for approval of sections for use with a previously approved contract, if the previously approved contract was not approved on a sectional basis.

  (3) If an HMO files for approval of sections for a previously approved contract, the submission shall:

    (a) Identify by form number and date of approval any sections that the new sections will replace; and

    (b) Include a copy of the currently approved contract, unless the Commissioner waives the requirement or determines that a copy is not necessary to review the submission.

#### Regulation .04 Variable Information.

*COMAR 31.12.02.04*

A. Individual Contracts.

  (1) Except as specified in §A(2) of this regulation, an HMO may not include variable material in an individual contract, or in a form to be used with an individual contract.

  (2) An HMO may include variable material, in an individual contract or in a form to be used with an individual contract in the following portions of the form:

    (a) The specifications, data, or schedule page;

    (b) The product marketing name;

    (c) The address of the HMO;

    (d) Signatures of officers of the HMO;

    (e) Descriptions of copayment amounts, deductibles, coinsurance amounts, out-of-pocket limits, annual maximums, or lifetime maximums;

    (f) Specific dates, such as effective dates and termination dates; and

    (g) Descriptions of benefit amounts or benefit limits.

  (3) If an individual contract or a form to be used with an individual contract contains variable material as permitted under §A(2) of this regulation, the HMO shall:

    (a) Bracket the variable material or otherwise mark the variable material to denote variability; and

    (b) Include a statement of variability, in duplicate, that discusses how each variable item may change.

  (4) If an individual contract or a form to be used with an individual contract is approved with variable material, an HMO may not submit a new statement of variability to be used with the previously approved contract or form, except for the following:

    (a) Copayment amounts;

    (b) Coinsurance amounts;

    (c) Deductible amounts;

    (d) Out-of-pocket limits;

    (e) Annual maximums;

    (f) Lifetime maximums;

    (g) Benefit amounts; or

    (h) Benefit limits.

  (5) An HMO shall include the following with a new statement of variability filing for a previously approved form:

    (a) A cover letter identifying the HMO and the HMO's National Association of Insurance Commissioners company code number; and

    (b) The form number and date of approval of the form for which new variable material is being submitted.

B. Group Contracts.

  (1) An HMO may include variable material in a group contract or in a form to be used with a group contract, if the HMO:

    (a) Brackets the variable material or otherwise marks the variable material to denote variability; and

    (b) Includes a statement of variability, in duplicate, that discusses how each variable item may change, including all textual variations that are intended.

  (2) If a group contract or a form to be used with a group contract is approved with variable material, an HMO may not submit a new statement of variability to be used with the previously approved group contract or form, except for the following:

    (a) Copayment amounts;

    (b) Coinsurance amounts;

    (c) Deductible amounts;

    (d) Out-of-pocket limits;

    (e) Annual maximums;

    (f) Lifetime maximums;

    (g) Benefit amounts; or

    (h) Benefit limits.

  (3) An HMO shall include the following with a new statement of variability filing for a previously approved form:

    (a) A cover letter identifying the HMO and the HMO's National Association of Insurance Commissioners company code number; and

    (b) The form number and date of approval of the form for which new variable material is being submitted.

#### Regulation .05 Failure to Respond to the Commissioner's Correspondence.

*COMAR 31.12.02.05*

A. The Commissioner shall deem a filing withdrawn by the HMO if the HMO fails to respond to correspondence from the Commissioner regarding the filing within 90 days of the date of the correspondence from the Commissioner.

B. If an HMO resubmits a form for approval after 90 days of the date of the Commissioner's correspondence regarding the filing in which the form was included, the HMO shall:

  (1) Include a new filing fee for the form and associated premium rates included in the filing; and

  (2) Include in the filing all the information required in Regulation .03 of this chapter.

#### Regulation .06 Contract Forms.

*COMAR 31.12.02.06*

A. Form Numbers.

  (1) Each form shall be identified by a form number that is unique to that form.

  (2) The form number shall be printed in the lower left corner of the first page, and no other number may appear near the form number.

B. The text of each form shall be printed in a style of type which is easily legible, the size of which shall be uniform and not less than 10 point with a lower case unspaced alphabet length not less than 120 point. The text shall include all printed matter except the name and address of the HMO, name or title of the policy, the brief description, if any, and captions and subcaptions.

C. Each form shall be clearly worded with all limitations, exclusions, and exceptions printed in the same size of type used to describe the benefits and grouped together under appropriate captions in boldfaced type.

D. Name of HMO.

  (1) Each complete form, except riders or endorsements, shall bear on the face the corporate name and either:

    (a) The address (city and state) of the HMO; or

    (b) The address of the company office that will administer the form.

  (2) The name of the HMO shall appear more prominently on a form than the name of:

    (a) An affiliate;

    (b) A producer;

    (c) An underwriter;

    (d) A holding company; or

    (e) A third party administrator.

  (3) The name of the HMO shall be printed in a size of type larger than the title of the policy.

E. Time shall be determined by any of the following which the HMO specifies in the contract:

  (1) Time at the place the enrollee resides;

  (2) Time at the place the contract is delivered;

  (3) Time at the place the treatment is delivered; or

  (4) Time at the location of the administrative office of the HMO.

F. Each form shall contain the signature of a responsible officer of the HMO.

G. A contract, certificate, rider, or endorsement may not contain any advertising material.

H. HMO Coverage as Secondary Coverage.

  (1) Each individual contract, group contract, and group certificate shall state whether or not benefits provided are to be secondary to the benefits which the member is entitled to receive under:

    (a) Workers' compensation insurance;

    (b) Medicare; and

    (c) Any programs for which the member is not required to pay.

  (2) An HMO contract may not:

    (a) Provide benefits that are secondary to benefits payable under an automobile policy; or

    (b) Include an exclusion for losses covered by an automobile policy.

I. Each individual contract and group contract shall provide that notice of any increase in charges shall be given to the contract holder by the HMO at least 45 days before the change in rate is proposed to become effective.

J. Each individual contract provided to subscribers shall describe the health services to be provided under the contract and shall contain the entire agreement between the HMO and the subscriber, including but not limited to:

  (1) Date and time of inception and termination of contract;

  (2) Initial rate to be charged and when the initial rate may be modified;

  (3) Mode of payment, with provision for change of mode, if available;

  (4) Late payment and reinstatement privileges;

  (5) Cost sharing provisions, including copayments, coinsurance, and deductibles;

  (6) Renewal conditions and applicable termination provisions;

  (7) Provisions for adding new family members;

  (8) Services to be provided under the contract;

  (9) Provision for out-of-area coverage;

  (10) Limits on length of stay, if any;

  (11) Other limitations, exclusions, and exceptions; and

  (12) The formal procedure to be followed in filing complaints or grievances.

K. Each individual contract which covers the spouse of the subscriber shall provide that, in the event of the death of the subscriber, the spouse will become the successor subscriber.

L. Each individual contract shall provide that the subscriber may, if the contract is not satisfactory for any reason, return it within 10 days of its receipt and receive a full refund of the charges paid. This right may not be exercised, however, if any member under the contract utilizes the services of the HMO within the 10-day period.

M. Each group contract and each group certificate furnished to subscribers of a group shall comply with all applicable provisions required by §§A—J of this regulation, inclusive, except that the certificate may omit those items which pertain only to the group contract holder.

N. Each individual contract, group contract, and group certificate shall include an incapacitated child provision that complies with the requirements found in Insurance Article, §15-402, Annotated Code of Maryland.

O. Newborn Child, Adopted Child, Child Under Guardianship Provision. Each individual contract, group contract, and group certificate shall contain a provision for covering newborn children, adopted children, and children under guardianship in accordance with Insurance Article, §15-401, Annotated Code of Maryland.

P. Each individual contract, group contract, and group certificate shall provide that, if the HMO for any reason beyond its control is unable to provide the health services promised in the contract, the HMO shall be liable for reimbursement of the expenses necessarily incurred by any member in procuring the services through other providers, to the extent prescribed by the Insurance Commissioner of Maryland.

#### Regulation .07 Application.

*COMAR 31.12.02.07*

A. An application form shall stipulate the plan and any optional benefits being applied for.

B. Permissible Look-Back Periods.

  (1) Except as provided in §B(2) of this regulation, an application form may not ask any question relative to any previously existing injury, sickness, or condition which has not required medical care or advice during the:

    (a) 7-year period immediately preceding the date of the application if the application is made for coverage under a group contract; or

    (b) 5-year period immediately preceding the date of the application, if the application is made for coverage under an individual contract.

  (2) An application may inquire about a dismemberment or other current impairment, the cause of which may have occurred before the time periods permitted by §B(1) of this regulation.

C. If an application contains questions regarding past or present health conditions:

  (1) The questions shall be asked to the best of the applicant's knowledge and belief; or

  (2) The application shall include a statement that all of the answers provided are representations and are not warranties.

D. If a rider or endorsement modifies the coverage applied for, signed acceptance by the applicant is required at or before delivery of the contract.

E. A statement may not appear in the application with respect to a proxy through which one or more members of the board of directors is authorized to vote in the election of directors, or at any meeting of the board of directors.

F. If an application inquires about the applicant's participation in “hazardous activities”, the application shall list the activities that are considered to be “hazardous”.

G. If an application inquires about the applicant's use of “other habit-forming drugs”, the application shall list the specific drugs that are considered “habit-forming”.

H. If an application inquires about a symptom of an applicant, the question shall be asked about a “known symptom” of a physical condition or mental condition.

I. If an application inquires if an applicant has had any indication of a physical condition or mental condition, the question shall be asked about a “known indication” of a physical condition or mental condition.

J. Applications for Individual HMO Contracts.

  (1) If an application is to be used by more than one carrier, the application shall include check-off boxes to indicate the carrier to which application is being made.

  (2) Each carrier using the application shall:

    (a) File the application with the Commissioner for approval; and

    (b) Receive approval of use of the application from the Commissioner before using it in Maryland.

K. Applications for Group HMO Contracts.

  (1) A group application may be used by more than one carrier if each carrier using the application:

    (a) Files the application with the Commissioner; and

    (b) Receives approval of the application from the Commissioner before using it in Maryland.

  (2) If more than one carrier requests approval to use the same application with different group applicants, the application shall include check-off boxes to indicate the carrier to which application is being made.

  (3) If more than one carrier requests approval to use the same application with the same group applicant, the application shall clearly identify the coverages underwritten by each carrier.

L. If an application is to be completed by more than one individual, the signature box in the application shall clearly indicate that the signature applies only to the portion of the application completed by that individual.

#### Regulation .08 Charges.

*COMAR 31.12.02.08*

A. The submittal of a form shall be accompanied by the submittal of the rates charged for it, together with detailed supporting actuarial data. Subsequent changes in charged rates shall be submitted with detailed supporting actuarial data at least 60 days before the date that any change in the rate is proposed to become effective.

B. The Commissioner shall approve or disapprove any rate submittal or change in the same manner as prescribed for approval or disapproval of forms.

C. An HMO may not make or permit any differential in charged rates for any reason based on the age or sex of an enrollee unless there is actuarial justification for the differential.

D. Charges may not be excessive, inadequate, or unfairly discriminatory.

#### Regulation .09 Advertising.

*COMAR 31.12.02.09*

A. Advertising shall be truthful and may not be misleading in fact or implication.

B. Advertising may not use words or phrases whose:

  (1) Meaning is unclear or ambiguous; or

  (2) Understanding depends upon familiarity with technical terminology.

C. Advertising may not include words, phrases, or illustrations that are used in a manner which misleads or has the capacity or tendency to deceive or mislead.

D. All advertising shall contain the name and address of the HMO as filed with the Commissioner.

#### Regulation .10 Termination of Services.

*COMAR 31.12.02.10*

A. Termination of a Particular Service.

  (1) If an HMO desires to cease offering a service under the health care contract in force, the services may not be terminated without prior approval of the Commissioner.

  (2) If an HMO ceases offering a service under an in-force health care contract, arrangements equitable to the members regarding a cost adjustment or substitution of an equivalent service satisfactory to the Commissioner shall be made.

B. A member of an HMO may have the membership cancelled or nonrenewed by the HMO only for the following reasons:

  (1) Termination of the conditions, other than a change in the health of the member, under which the member became eligible to be enrolled under a group contract;

  (2) Inability of the medical staff and the member to establish a reasonable physician-patient relationship;

  (3) The member no longer resides, lives, or works in the service area;

  (4) Failure of the member to pay any deductible or copayment charges permitted under any contracts approved by the Commissioner;

  (5) Fraudulent use of the HMO's identification card by the member;

  (6) The alteration or sale of prescriptions by the member;

  (7) An attempt by the subscriber to enroll noneligible persons as dependents;

  (8) The member has performed an act or practice that constitutes fraud;

  (9) The member has made an intentional misrepresentation of material fact under the application for the HMO coverage; or

  (10) Failure of the subscriber to pay any premium charge when due.

C. Failure to Follow Prescribed Course of Treatment.

  (1) An HMO may not cancel or nonrenew a member's HMO membership due to the member's refusal to follow a prescribed course of treatment.

  (2) The HMO contract may provide that the HMO is not required to furnish any further benefits or services for a particular condition if the member refuses to follow a prescribed course of treatment for that condition.

  (3) If the member disagrees with a prescribed course of treatment from an HMO physician, the HMO shall permit the member to receive a second opinion from another HMO physician.

  (4) If the member receives a second opinion as described in §C(3) of this regulation, and if the second physician disagrees with the prescribed course of treatment, the HMO may not refuse to provide services or benefits for that particular condition, subject to the HMO's coverage documents and its utilization review protocols and policies.

D. Required Notice of Termination.

  (1) Except as provided in §D(3) of this regulation, if a member's coverage in an HMO is terminated or nonrenewed for a reason set forth in §B(2)—(9) of this regulation, the HMO shall provide notice of the termination or nonrenewal not less than 30 days before the date of cancellation or nonrenewal.

  (2) The notice required by §D(1) of this regulation shall be delivered to the member in person or by first class mail addressed to the member's address last known to the HMO.

  (3) An HMO is not required to provide the notice described in §D(1) of this regulation if the cause of termination is nonpayment of premium.

E. If the member is entitled to have issued a health care contract, the notice required by §D(1) of this regulation shall be accompanied by information as to how the member may apply for a contract.

F. If termination or nonrenewal is for nonpayment of copayments or deductibles, the notice required by §D(1) of this regulation shall state:

  (1) The amount of charges due; and

  (2) That if the member pays the amount of charges due, plus any administrative cost incurred in preparing and delivering the notice before the date of cancellation, membership will remain in full force and effect.

#### Regulation .11 Conversion of Coverage. — Repealed

*COMAR 31.12.02.11*

#### Regulation .12 General Operation of Health Maintenance Organizations.

*COMAR 31.12.02.12*

A. The HMO shall provide, without limitations as to frequency or cost, except as established in the health care contract and provided for in these regulations, basic and supplemental health services to its members in the following manner:

  (1) Reasonable deductibles and copayments may be required for the provision of specific services within the basic health services, unless the payments or the manner of payment unduly serves as a barrier to the delivery of basic health services;

  (2) All services of health care providers provided for in the health care contract shall be provided through health care providers that are under contract to, or have agreements with, the HMO, except that this subsection does not apply to:

    (a) Health care providers' services which the HMO and the Commissioner determine are unusual or infrequently used;

    (b) Emergency services;

    (c) Services performed outside of the HMO's service area for urgent care services;

    (d) Services received from health care providers that do not contract with the HMO, if the member has a benefit under the HMO contract for services received from non-HMO health care providers; or

    (e) Services received from a health care provider that does not contract with the HMO, if the member was referred to the health care provider by the HMO or by a provider under contract with the HMO;

  (3) All services provided for in the health care contract shall, within the area serviced by the HMO, be available and accessible to each of its members:

    (a) Promptly as appropriate;

    (b) In a manner which assures continuity; and

    (c) When medically necessary, 24 hours a day and 7 days a week; and

  (4) Emergency services as follows:

    (a) The HMO shall be liable for emergency expenses incurred by the member in securing any service customarily provided in the contract for emergency services incurred by the member which cannot reasonably be provided through the facilities of the HMO and which are considered medically necessary and justified; and

    (b) The method used to establish the necessity of these services and the method the HMO shall use in fulfilling its financial responsibility for its health care services shall be set forth in the health care contract.

B. Health Care Contracts.

  (1) The HMO shall bind itself to provide to the members basic health services and other supplemental services as specified in the health care contract.

  (2) A copy of coverages and costs shall be given to each member or member family unit.

  (3) All services included in the benefits, as well as any limitations or exclusions, shall be clearly stated in written form.

#### Regulation .13 Provider Contracts.

*COMAR 31.12.02.13*

A. All signed written agreements, including those defining physicians' services, shall be on file and available for review by the Commissioner at all times in the HMO's central office.

B. If agreements with consultants or other institutions are established by any HMO, the responsibilities, functions, objectives, and the terms of the agreements including financial arrangements and charges, of each outside resource shall be described in writing and signed by an authorized representative of the facility and the person or the agency providing the services.

C. Filing Requirements.

  (1) The HMO may not use a provider contract unless the form of the contract has been filed in duplicate with the Commissioner.

  (2) The HMO shall file a provider contract at least 30 days before its intended use.

  (3) Form Numbers.

    (a) The provider contract shall be identified by a unique form number that appears in the lower left corner of the first page of the provider contract.

    (b) Each amendment rider to a provider contract shall be identified by a unique form number that appears in the lower left corner of the first page of the amendment rider.

  (4) If the HMO intends to amend any of the following provisions of a previously filed provider contract, the HMO shall file the amendment with the Commissioner at least 30 days before its intended use:

    (a) The hold-harmless clause;

    (b) Any provision dealing with the administration of a coordination of benefits clause;

    (c) Any provision dealing with termination of the provider contract, as described in Insurance Article, §15-112, Annotated Code of Maryland;

    (d) Any provision dealing with the process of filing or payment of claims, as described in Insurance Article, §§15-1004 and 15-1005, Annotated Code of Maryland;

    (e) Any provision dealing with when capitation payments are due for newly assigned HMO members, as described in Insurance Article, §15-113, Annotated Code of Maryland;

    (f) Any provision dealing with retroactive denials of reimbursement or denials of reimbursement for preauthorized care, as described in Insurance Article, §§15-1008 and 15-1009, Annotated Code of Maryland;

    (g) Any provision dealing with the payment of bonuses or other incentive-based compensation, as described in Insurance Article, §15-113, Annotated Code of Maryland, but actual payment amounts or percentages are not required to be filed;

    (h) Any provision requiring the health care provider to provide services to other than HMO members or giving the health care provider an option to provide services to other than HMO members, as described in Insurance Article, §15-112, Annotated Code of Maryland;

    (i) Any provision that gives the HMO the right to assign, transfer or subcontract a health care provider's contract to an insurer that offers personal injury protection coverage, as described in Insurance Article, §15-125, Annotated Code of Maryland;

    (j) Any provision dealing with a provider's responsibility for the acts or decisions of the HMO, as described in Health-General Article, §19-710, Annotated Code of Maryland;

    (k) Any provision dealing with the applicability of Maryland law; or

    (l) Any provision of the contract that is revised to comply with Maryland law.

D. The Commissioner shall consider any provider contract filed with the Commissioner to be proprietary commercial information and not a public record.

E. All provider contracts, including agreements with hospitals, nonphysician providers, clinics, physicians' offices, and other related providers are subject to disapproval by the Commissioner for any of the following reasons:

  (1) The provider contract does not meet reasonable requirements of providing quality medical care;

  (2) The provider contract does not contain a hold-harmless clause in compliance with Health-General Article, §19-710(i), Annotated Code of Maryland;

  (3) The provider contract does not provide for the rendition of services called for in the contracts with members in a reasonable manner; or

  (4) The provider contract contains a provision that does not comply with Maryland law.

### Chapter 03 — Health Maintenance Organizations — Mandatory Point-of-Service Option

**Authority:** Health-General Article, §§19-705(a)(2) and 19-710.2, Annotated Code of Maryland

**Administrative History:** Effective date: July 1, 1996 (23:13 Md. R. 943)

**Administrative History:** Regulation .02C amended as an emergency provision effective July 1, 1996 (23:15 Md. R. 1079); amended permanently effective November 4, 1996 (23:22 Md. R. 1496)

**Administrative History:** Chapter recodified from COMAR 09.31.07 to COMAR 31.12.03 effective September 7, 1998 (25:18 Md. R. 1439)

**Administrative History:** Regulation .02C amended effective August 3, 2015 (42:15 Md. R. 1019)

#### Regulation .01 Scope.

*COMAR 31.12.03.01*

This chapter applies to all health maintenance organizations operating in this State.

#### Regulation .02 Required Notice.

*COMAR 31.12.03.02*

When a health maintenance organization is the sole carrier offered to group members by a group policyholder, the health maintenance organization:

A. Shall offer the group policyholder a point-of-service option for the individual group member to accept or reject;

B. May not impose a minimum participation level on the mandatory point-of-service option; and

C. As part of the application, shall provide to each group policyholder the following disclosure statement, for each point-of-service option offered:

#### Regulation .03 Record Retention.

*COMAR 31.12.03.03*

Each health maintenance organization shall maintain copies of the notice and the group policyholder response for a period of 3 years or until its next market conduct examination, whichever occurs first.

### Chapter 04 — Dental Plans — General Provisions

**Authority:** Insurance Article, §§2-109, 14-124(b), 14-410, 14-412, 15-112(b)(1)(i), 15-122(b), 15-833(j),and Title 15, Subtitles 10A and 10D, Annotated Code of Maryland

**Administrative History:** Effective date: September 16, 1991 (18:18 Md. R. 2004)

**Administrative History:** Chapter recodified from COMAR 09.30.82 to COMAR 31.12.04 effective September 7, 1998 (25:18 Md. R. 1439)

**Administrative History:** Regulation .02B amended effective August 2, 2004 (31:15 Md. R. 1187); August 3, 2015 (42:15 Md. R. 1019)

**Administrative History:** Regulation .04 amended effective August 2, 2004 (31:15 Md. R. 1187); August 3, 2015 (42:15 Md. R. 1019)

**Administrative History:** Regulation .05 repealed and new Regulation .05 adopted effective August 2, 2004 (31:15 Md. R. 1187)

**Administrative History:** Regulation .06A amended effective August 2, 2004 (31:15 Md. R. 1187)

**Administrative History:** Regulation .07B amended effective August 2, 2004 (31:15 Md. R. 1187)

**Administrative History:** Regulation .08G amended effective August 2, 2004 (31:15 Md. R. 1187)

#### Regulation .01 Purpose.

*COMAR 31.12.04.01*

The purpose of this chapter is to provide appropriate standards and requirements for dental plan contracts.

#### Regulation .02 Definitions.

*COMAR 31.12.04.02*

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

  (1) “Closed panel dental benefit contract” means a dental benefit contract that does not provide benefits for services provided by a dentist who is not a plan dentist, with the exception of:

    (a) Emergency services; and

    (b) Out-of-network services required by Insurance Article, §15-830, Annotated Code of Maryland.

  (2) “Contract holder” means for:

    (a) Group contracts, the organization or entity to which the contract is issued;

    (b) Individual contracts, the person who applies for a contract covering:

      (i) One individual, or

      (ii) One individual and that individual's dependents.

  (3) “Copayment” means the amount:

    (a) Payable for a particular service by an enrollee in accordance with the patient charge schedule; or

    (b) For which the enrollee is responsible as a condition for receiving benefits under a dental benefit contract.

  (4) “Dental benefit contract” means a contract which provides benefits for dental services entered into between the dental plan organization and:

    (a) An individual contract holder covering the:

      (i) Subscriber;

      (ii) Subscriber and the subscriber’s dependents;

      (iii) Subscriber and the subscriber’s family members;

      (iv) Subscriber’s dependent or dependents; or

      (v) Subscriber and the subscriber’s dependents and family members; or

    (b) The group contract holder covering the:

      (i) Enrolled members of the group;

      (ii) Enrolled members of the group and their dependents;

      (iii) Enrolled members of the group and their family members; or

      (iv) Enrolled members of the group and their dependents and family members.

  (5) “Dental plan” means any contractual arrangement for dental services.

  (6) “Dental plan organization” means a:

    (a) Person that provides directly, arranges for, or administers a dental plan on a prepaid or postpaid individual or group capitation basis; or

    (b) Nonprofit health service plan which limits its operation to providing directly, or arranging for or administering a plan providing, dental services.

  (7) “Dental service” has the meaning stated in Insurance Article, §14-401, Annotated Code of Maryland.

  (8) “Dependent” means an individual who is the spouse or child of a subscriber.

  (9) “Enrollee” means a subscriber, or any dependent of the subscriber, who is enrolled in the dental plan organization.

  (10) “Evidence of coverage” means any certificate, agreement, or contract issued to a subscriber of a group that sets out the dental services to which the enrollees are entitled.

  (11) “Patient charge schedule” means a list of amounts which the enrollee is required to pay the plan dentist or the dental plan organization for particular services rendered under the dental benefit contract.

  (12) “Plan dentist” means any dentist who has contracted with the dental plan organization or with an entity acting on behalf of the dental plan organization to provide dental services to the enrollees.

  (13) “Provider contract” means a contract between the dental plan organization or an entity acting on behalf of the dental plan organization and a plan dentist.

  (14) “Subscriber” means, for:

    (a) Group dental benefit contracts, the person who is eligible to be covered under the contract, other than as a dependent, by reason of satisfying the eligibility requirements of the group;

    (b) Individual dental benefit contracts, the individual who applies to the dental plan organization for coverage for:

      (i) That individual only;

      (ii) The individual and the individual’s dependents; or

      (iii) The individual’s dependent or dependents.

#### Regulation .03 Applicability.

*COMAR 31.12.04.03*

This chapter applies to:

A. Dental plan organizations authorized under Insurance Article, Title 14, Subtitles 1 and 4, Annotated Code of Maryland; and

B. Contracts issued or renewed by the dental plan organizations listed in §A of this regulation on or after the effective date of this chapter.

#### Regulation .04 Dental Benefit Contract.

*COMAR 31.12.04.04*

Each dental benefit contract shall contain the following provisions:

A. The effective date of contract provision;

B. A provision describing the payment of required subscription fees or premiums;

C. A grace period provision, pursuant to Regulation .05 of this chapter;

D. For group dental benefit contracts, the eligibility requirements and effective date of coverage for members of the group and their dependents;

E. A provision describing the benefits available under the contract;

F. A provision describing the copayments for which the enrollee is responsible;

G. A provision describing the service area, if applicable;

H. If a dental plan organization generally provides benefits only within a stated service area, a provision providing for emergency dental services outside the service area, with the term “emergency” including care to alleviate acute pain;

I. For closed panel dental benefit contracts:

  (1) A provision indicating that if a plan dentist refers the enrollee to a specialist who is not a plan dentist for dental services which are covered under the dental benefit contract, the dental plan organization shall be responsible for payment of the specialist’s charges to the extent the charges exceed the copayment specified in the dental benefit contract; and

  (2) A provision which reads substantially as follows: “If during the term of this contract none of the plan dentists can render necessary care and treatment to the enrollee due to circumstances not reasonably within the control of the dental plan organization, such as complete or partial destruction of facilities, war, riot, civil insurrection, labor disputes, or the disability of a significant number of the plan dentists, then the enrollee may seek treatment from an independent licensed dentist of the enrollee’s own choosing. The dental plan organization will pay the enrollee for the expenses incurred for the dental services with the following limitations: The dental plan organization will pay the enrollee for services which are listed in the patient charge schedule as No Charge, to the extent that such fees are reasonable and customary for dentists in the same geographic area; the dental plan organization will also pay the enrollee for those services listed in the contract for which there is a copayment, to the extent that the reasonable and customary fees for such services exceed the copayment for such services as set forth in the contract. The enrollee may be required to give written proof of loss. The dental plan organization agrees to be subject to the jurisdiction of the Maryland Insurance Commissioner in any determination of the impossibility of providing services by plan dentists.”;

J. A provision setting out the terms under which coverage will terminate;

K. A provision setting out a grievance procedure provision that complies with the requirements of Insurance Article, Title 15, Subtitle 10D, and as applicable, Subtitle 10A, Annotated Code of Maryland; and

L. A provision setting out an extension of benefits in accordance with Insurance Article, §15-833, Annotated Code of Maryland.

#### Regulation .05 Grace Period Requirements.

*COMAR 31.12.04.05*

A. Individual Dental Benefit Contracts.

  (1) If the individual dental benefit contract is guaranteed renewable for the life of the individual dental benefit contract, the dental benefit contract shall contain in substance the following provision: “Grace Period: A grace period of 31 days will be granted for the payment of each premium falling due after the first premium, during which grace period this contract shall continue in force.”

  (2) If the individual dental benefit contract gives the dental plan organization the right to refuse renewal, the individual dental benefit contract shall contain in substance the following provision: “Grace Period: Unless at least 30 days before the premium due date the dental plan organization has delivered to the subscriber, or has mailed to the subscriber's last address as shown by the records of the dental plan organization, written notice of its intention not to renew this contract beyond the period for which the premium has been accepted, a grace period of 31 days will be granted for the payment of each premium falling due after the first premium, during which grace period this contract shall continue in force.”

B. Group Dental Benefit Contracts.

  (1) Each group dental benefit contract shall contain in substance the following provision: “Grace Period: A grace period of 30 days will be granted for payment of each premium due after the first premium, unless the dental plan organization does not intend to renew the contract beyond the period for which premium has been accepted and notice of the intention not to renew is delivered to the contract holder at least 45 days before the premium is due. During the grace period the contract shall continue in force”.

  (2) Any additional provisions related to the grace period shall be expressly stated in the group dental benefit contract, subject to the following limitations:

    (a) Unless a dental plan organization receives a notice of the contract holder's intention to terminate the policy before the end of the grace period, the dental plan organization may collect premium for the 30-day grace period;

    (b) If a dental plan organization receives a notice of intention to terminate the group dental benefit contract during the grace period, the dental plan organization may collect premium for the period beginning on the first day of the grace period until the date on which notice is received or the date of termination stated in the notice, whichever is later; and

    (c) If premium for the 30-day grace period is paid after the grace period ends, a dental plan organization may charge interest for the premium for the group dental benefit contract, but:

      (i) Interest may not begin to accrue during the 30-day grace period; and

      (ii) The interest rate charged may not exceed an effective rate of 6 percent per year.

#### Regulation .06 Evidence of Coverage.

*COMAR 31.12.04.06*

A. Except for Regulation .04A—C of this chapter, the evidence of coverage under any group contract shall contain all of the provisions required in Regulation .04 of this chapter.

B. The name of the group shall be specified in the evidence of coverage.

#### Regulation .07 Optional Provisions.

*COMAR 31.12.04.07*

A. Dental benefit contracts may contain the provisions in §§B—D of this regulation, and if any of the provisions are included in a group dental benefit contract, the same provision shall be contained in the corresponding evidence of coverage.

B. General Provisions.

  (1) A provision may be included specifying the dental plan organization's intention to charge a specified missed appointment fee. The fee shall be reasonable in relation to the nature of the procedure for which the missed appointment had been made. Neither the plan dentist nor the dental plan organization may charge a missed appointment fee unless this provision appears in the dental benefit contract.

  (2) A provision may be included specifying the dental plan organization's ability to increase premiums or subscription fees, with this provision indicating that these fees may not be increased unless:

    (a) The contract holder has been given written notice at least 45 days before the effective date of the increase; and

    (b) In the case of:

      (i) An individual contract, present rates have not been changed for at least 12 months,

      (ii) A group contract, present rates under the contract have been in effect for at least 12 months.

  (3) A provision may be included specifying the dental plan organization's intention to impose a financial penalty on an enrollee for voluntarily withdrawing from the dental plan during the first year of coverage, which penalty may not:

    (a) Be charged if the enrollee withdraws from the dental plan after being covered for at least 12 months; or

    (b) Exceed the usual, customary, and reasonable charge for services received reduced by the sum of the subscription fees paid by or for the enrollee and any copayments paid by or for the enrollee.

  (4) A provision may be included specifying the dental plan organization's ability to increase the patient charge schedule, with the provision indicating that the increase may not be effective unless the:

    (a) Present schedule has been in effect for at least 12 months; and

    (b) Contract holder has been given written notice of the increase at least 30 days before the effective date of the increase.

  (5) A provision may be included specifying the dental plan organization's rights if an enrollee refuses to follow a particular course of treatment. The dental plan organization may not terminate the membership of an enrollee for refusal to follow an appropriate course of treatment for a particular condition. The provision may indicate that the dental plan organization may refuse to provide any further benefits for the particular condition if the enrollee refuses to accept the recommended course of treatment.

  (6) A provision may be included specifying the dental plan organization's rights if an enrollee fraudulently uses his membership card or knowingly permits his membership card to be used by others. The dental plan organization may terminate an enrollee's coverage if the enrollee fraudulently uses his membership card or knowingly permits his membership card to be used by others. The dental plan organization may not terminate coverage for an entire family because a dependent fraudulently uses the membership card. In this instance, only the dependent's coverage may terminate.

C. Termination Provision. A provision may be included which specifies that the dental plan organization may terminate an enrollee's coverage if the enrollee is unable to maintain a satisfactory dentist-patient relationship with a plan dentist, with this provision:

  (1) Indicating that before terminating the enrollee's coverage, the dental plan organization shall permit the enrollee to change primary dentists at least once;

  (2) Specifying that the enrollee shall be given written notice of the termination at least 30 days before the termination of the enrollee's membership.

D. Dependent Children Provision. If the contract provides coverage for dependent children, the contract shall also contain the following provision: “Notwithstanding any limiting age stated in the contract, any unmarried child covered under the contract as a dependent of an enrollee who is chiefly dependent for support upon the enrollee, and who, at the time of reaching the limiting age, is incapable of self-support because of mental or physical incapacity that commenced prior to the child's attaining the limiting age, shall continue to be covered under the contract while remaining so dependent, unmarried, and mentally or physically incapacitated, until the coverage on the enrollee upon whom the child is dependent terminates.”

#### Regulation .08 Provider Contracts.

*COMAR 31.12.04.08*

A. Each provider contract shall contain the provisions in §§B—G of this regulation.

B. A provision shall be included to require the provider to make an initial commitment to the plan of at least 12 months. The provider may not terminate the contract during this 12-month period unless the provider becomes unavailable during that initial time for reasons beyond the control of the dental plan organization or the provider.

C. Hold-Harmless Clause. A hold-harmless clause, which shall read substantially as follows is required: “The provider agrees that under no circumstances, including nonpayment by the dental plan organization, insolvency of the dental plan organization, or breach of this contract, shall provider seek payment from an enrollee for services rendered under this contract for other than a copayment listed in the dental benefit contract. Provider further agrees that this provision shall survive the termination of this provider contract regardless of the cause of the termination.”

D. A provision specifying when the contract becomes effective is required.

E. A provision specifying the date the contract terminates is required.

F. A renewal provision is required.

G. A provision specifying the benefits the provider shall supply the enrollees is required, specifying that:

  (1) The provider shall supply services to enrollees in exchange for the copayments specified in the dental benefit contract while the provider's provider contract is in force; and

  (2) After the provider contract terminates, the provider shall continue to provide services to enrollees in accordance with Insurance Article, §15-112, Annotated Code of Maryland.

#### Regulation .09 Contract Forms.

*COMAR 31.12.04.09*

A. The dental plan organization:

  (1) Shall provide a written dental benefit contract to each group contract holder;

  (2) Shall provide a written evidence of coverage to each individual covered under a group dental benefit contract;

  (3) Shall provide a written dental benefit contract to each individual who applies for individual dental coverage;

  (4) Shall execute a written provider contract with each of the dental plan organization's plan dentists;

  (5) May not deliver or issue for delivery in this State any of the following forms unless the form has been filed with and approved by the Insurance Commissioner:

    (a) Dental benefit contract,

    (b) Evidence of coverage,

    (c) Provider contract,

    (d) Application form, and

    (e) Riders or endorsement forms.

B. The Commissioner shall disapprove any form filed, or withdraw any previous approval, if the form:

  (1) Contains or incorporates by reference, when the incorporation is otherwise permissible, any inconsistent, ambiguous, or misleading clauses, or exceptions and conditions which deceptively affect the risk purported to be assumed in the general coverage of the contract;

  (2) Has any title, heading, or other indication of its provisions which is likely to mislead the contract holder or individual;

  (3) Contains an inequitable provision or a provision without substantial benefit to the contract holder;

  (4) Is printed or otherwise reproduced in a manner as to render any provision of the form substantially illegible;

  (5) Includes benefit provisions which are unreasonable in relation to the premium or subscription fee charged; or

  (6) Is a provider contract which does not provide for the rendering of covered services in a reasonable manner.

#### Regulation .10 Filing Requirements for Premium Rates and Subscription Fees.

*COMAR 31.12.04.10*

A. The filing of any dental plan contract or rider or endorsement by a dental plan organization in accordance with Regulation .09A(5) of this chapter shall be accompanied by the filing of premium rates or subscription fees.

B. A subsequent change in premium rates or subscription fees shall be filed with supporting data at least 30 days before the change is proposed to become effective.

### Chapter 05 — Dental Benefit Plan Coverage — Mandatory Point-of-Service Option

**Authority:** Insurance Article, §§2-109 and 15-114, Annotated Code of Maryland

**Administrative History:** Effective date:

**Administrative History:** Regulations .01—.03 adopted as an emergency provision effective July 1, 1996 (23:14 Md. R. 1005); adopted permanently effective November 4, 1996 (23:22 Md. R. 1496)

**Administrative History:** Chapter recodified from COMAR 09.31.21 to COMAR 31.12.05 effective September 7, 1998 (25:18 Md. R. 1439)

**Administrative History:** Regulation .02B amended effective August 3, 2015 (42:15 Md. R. 1019)

#### Regulation .01 Scope.

*COMAR 31.12.05.01*

This chapter applies to health maintenance organizations and dental plan organizations operating in this State.

#### Regulation .02 Required Notice.

*COMAR 31.12.05.02*

A. When a health maintenance organization or dental plan organization dental provider panel is the sole dental provider panel offered to group members by a group policyholder, the dental plan organization or the health maintenance organization:

  (1) Shall offer the group policyholder a dental point-of-service option for the individual group member to accept or reject;

  (2) May not impose a minimum participation level on the mandatory dental point-of-service option; and

  (3) As part of the application, shall provide to each group policyholder the disclosure statement described in §B of this regulation, for each dental point-of-service option offered.

B. The notice shall read as follows:

#### Regulation .03 Record Retention.

*COMAR 31.12.05.03*

Each health maintenance organization or dental plan organization shall maintain copies of the notice and the group policyholder response for a period of 3 years or until its next market conduct examination, whichever occurs first.

### Chapter 06 — Managed Care Organizations — Financial Compliance Requirements

**Authority:** Health-General Article, §§15-102.3, 15-102.4(d), and 15-102.6; Insurance Article, §§2-109 and 4-311(b)(2);Annotated Code of Maryland Ch. 331, §3, Acts of 2000

**Administrative History:** Effective date:

**Administrative History:** Regulations .01—.06 adopted as an emergency provision effective November 8, 1996 (23:25 Md. R. 1730); adopted permanently effective February 10, 1997 (24:3 Md. R. 186)

**Administrative History:** Chapter recodified from COMAR 09.31.24 to COMAR 31.12.06 effective September 7, 1998 (25:18 Md. R. 1439)

**Administrative History:** Regulation .02-1 adopted effective August 20, 2001 (28:16 Md. R. 1484)

**Administrative History:** Regulation .03 amended effective May 24, 2004 (31:10 Md. R. 796)

#### Regulation .01 Definitions.

*COMAR 31.12.06.01*

A. All terms defined in Health-General Article, Title 15, Subtitle 1, Annotated Code of Maryland, which are used in this chapter have the same meaning as in that statute unless the terms are defined differently in this chapter. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

  (1) “Administration” means the Maryland Insurance Administration.

  (2) “Applicant” means an organization applying to become a managed care organization.

  (3) “Commissioner” means the Maryland Insurance Commissioner.

  (4) “Contract” means the contractual agreement for the provision of health care services on a prepaid, capitated basis entered into between a managed care organization and the Maryland Department of Health to provide health care benefits only to medical assistance program recipients.

  (5) “Department” means the Maryland Department of Health.

  (6) “Leasehold estate improvements” means capital improvements made to properties leased for 20 or more years and depreciated over the remaining life of the lease.

  (7) “Managed care organization (MCO)” means a managed care organization as defined in Health-General Article, §15-101(e)(2), Annotated Code of Maryland.

  (8) “NAIC” means the National Association of Insurance Commissioners.

  (9) “Secretary” means the Secretary of Health.

#### Regulation .02 Financial Requirements.

*COMAR 31.12.06.02*

A. An applicant or MCO may not engage in business as an MCO unless determined by the Insurance Commissioner to be in compliance with the financial requirements of Health-General Article, §15-102.4, Annotated Code of Maryland.

B. Upon request, the MCO shall submit to the Administration the following documents:

  (1) A copy of the articles of incorporation of the applicant or MCO and any amendments to it, certified by the Maryland Department of Assessments and Taxation;

  (2) A copy of the applicant's or MCO's current bylaws, if any, certified by the appropriate officer of the applicant or MCO;

  (3) A list of the names, addresses, and official capacity with the applicant or MCO of the individuals who are to be responsible for the conduct of the applicant's or MCO's affairs, including the members of the governing body, the officers, and directors;

  (4) A resume of the qualifications of the administrator, the medical director, officers, and other individuals associated with the applicant or MCO as requested by the Commissioner and the Department;

  (5) A statement generally describing the:

    (a) Applicant or MCO and its corporate structure;

    (b) Applicant's or MCO's operations;

    (c) Location of the facilities at which health care services will be regularly available to enrollees;

    (d) Number of physicians and personnel engaged or contracted with to provide health care services;

  (6) A statement describing with reasonable certainty the geographic area or areas to be served by the applicant or MCO;

  (7) A financial statement audited by an independent certified public accountant of the financial condition of the applicant or MCO, including:

    (a) Assets, liabilities, and minimum tangible net equity;

    (b) A prospective budget and expected cash flow analysis of the applicant or MCO for the first 24 months of its anticipated operation demonstrating its financial viability based on reasonable assumptions; and

    (c) Other financial information the Commissioner requires for adequate financial evaluation;

  (8) A power of attorney duly executed by the applicant or MCO appointing the Commissioner and the Commissioner's authorized deputies as the true and lawful attorney of the MCO in and for the State upon whom may be served all lawful process in any action, proceeding, or cause of action arising in this State against the MCO regarding the solvency and financial condition of the MCO; and

  (9) A certificate of compliance evidencing employee coverage under Labor and Employment Article, §9-105, Annotated Code of Maryland.

C. The list under §B(3) of this regulation shall include a full disclosure to the Commissioner of the extent and nature of any contracts or arrangements between any person listed in §B(3) of this regulation and the applicant or MCO, including any possible conflicts of interest. The applicant or MCO shall continually update the information required under §B(3)(a) of this regulation and make it available to the Commissioner at the Commissioner's request.

D. Insurance—General Liability and Medical Malpractice.

  (1) With the application, an applicant or MCO shall submit evidence of insurance for general liability and medical malpractice insurance.

  (2) The minimum limits of coverage shall be $1 million for any one loss and $3 million in the aggregate.

  (3) Evidence of renewal of coverage for the current year shall be submitted with the annual report.

E. Financial Requirements. In order to qualify for a determination of financial compliance, the applicant or MCO shall, at the time of making its initial application, demonstrate to the satisfaction of the Commissioner that the applicant or MCO has on hand sufficient liquid funds or a reasonably adequate cash flow to meet all organizational and administrative expenses incurred or expected to be incurred before commencing operations.

F. Determination of Financial Condition.

  (1) In a determination of the financial condition of an applicant or MCO, only the following shall be considered as admitted assets for both applicants and, on an ongoing basis, for MCOs:

    (a) Cash, in the possession of the applicant or MCO or in transit under its control, and the balance of any deposit of the applicant or MCO in a solvent Maryland bank or trust company;

    (b) Amounts due and payable to the applicant or MCO under contracts with the Department, net of any Department withholds, on the date the amounts become due and payable, but not more than 90 days past due;

    (c) Medical, surgical, and dental equipment, net of depreciation, and net of any liens, encumbrances, pledges, or judgments, that is used directly to provide health care benefits to medical assistance beneficiaries;

    (d) Prepaid charges on health care contracts with hospitals, or other health care institutions when approved by the Commissioner, including premiums prepaid for malpractice or general liability insurance;

    (e) Pharmaceutical and medical supply inventories;

    (f) Cost of land and depreciated cost of buildings owned and occupied by the applicant or MCO and used by it to directly provide health care, in excess of any encumbrances on it in an amount not greater than 20 percent of total admitted assets as reported by the applicant or MCO for:

      (i) An existing MCO as reported in its annual statement as of December 31 preceding the date of acquisition, or

      (ii) An applicant MCO as reported in the certified audited financial statement submitted as part of the application;

    (g) Leasehold estate improvements not exceeding 20 percent of total admitted assets as reported by the applicant or MCO for:

      (i) An existing MCO as reported in its annual statement as of December 31 preceding the date of acquisition to the extent that the initial cost is amortized over the useful life of the improvements but not beyond the termination of the lease, or

      (ii) An applicant MCO as reported in the certified audited financial statement submitted as part of the application;

    (h) Electronic, mechanical, and computer hardware, and any operating system software, used for data processing and accounting purposes, which is free and clear of any liens, encumbrances, pledges, or judgments, the cost of which shall be depreciated in full over a period not to exceed 5 calendar years;

    (i) Other assets, not inconsistent with the provisions of §§H and I of this regulation, deemed by the Commissioner available for the provision of health care, at values to be determined by the Commissioner.

  (2) Investments and securities owned and held by the applicant or MCO, must be held free and clear of any liens, encumbrances, pledges or judgments, and the income due or accrued thereon. No investment shall be made or engaged in by any domestic applicant or MCO unless the same have been authorized or ratified by the board of directors or by a committee thereof charged with the duty of supervising investments. All investments of the applicant or MCO may be held in a custodial account pursuant to the requirements of COMAR 31.04.09, Annotated Code of Maryland.

G. Assets Not Admitted.

  (1) The following may not be considered as admitted assets in the determination of the financial condition of an applicant or MCO:

    (a) Good will, trade names, and other like intangible assets;

    (b) Advances to officers, whether secured or not, and advances to employees, agents, and other persons on personal security only;

    (c) The amount, if any, by which the aggregate book value of the investments as carried in the ledger assets of the applicant or MCO exceeds the aggregate value as reported in the applicant or MCO's annual statement;

    (d) Office or administrative furniture and fixtures, leasehold improvements other than leasehold estate improvements which qualify under §F(1)(g) of this regulation, vehicles, and maintenance equipment;

    (e) Amount estimated as receivable under coordination of benefits and subrogation provisions; and

    (f) Any other amounts receivable in excess of 90 days past due.

  (2) All assets not allowed and all other assets of doubtful value or character included in any statement by an applicant or MCO to the Commissioner, or in any examiner's report to the Commissioner, shall also be reported to the extent of the value disallowed, as deductions from the gross assets of the applicant or MCO.

H. Liabilities Chargeable Against Assets. In any determination of the financial condition of an applicant or MCO, liabilities to be charged against its assets shall include but not be limited to:

  (1) The estimated amount necessary to pay for all accrued benefits to enrollees and all claims, both reported or unreported, incurred on or before the date of the statement, together with estimated costs of adjusting or settling disputed claims;

  (2) The pro rata amount of premium charges paid by or on behalf of enrollees for any period of coverage beyond the date of the statement; and

  (3) Any other liabilities, including but not limited to federal income taxes, payroll taxes, expenses, and other obligations due or accrued at the date of the statement.

I. Deposit of Securities. Every MCO to be considered in compliance with financial requirements shall deposit and maintain in trust with the State Treasurer, for the protection of its enrollees or its enrollees and creditors, cash or government securities of the type described in Insurance Article, §5-701(b), Annotated Code of Maryland, in the market value amount of $100,000.

J. Valuation of Investments.

  (1) All obligations having a fixed term and rate shall be:

    (a) If purchased at par, at the par value;

    (b) If purchased above or below par, on the basis of the purchased price adjusted so as to bring the value to par at maturity and so as to yield in the meantime the effective rate of interest at which the purchase was made.

  (2) Common, preferred, or guaranteed stocks shall be valued at market value. Market value may be from the original broker-dealer transaction advice and one of the following:

    (a) A nationally recognized rating agency such as Moody's Investor Service, Standard and Poor's Corporation, or any other similar organization approved by the Maryland Insurance Administration at the request of the MCO;

    (b) A nationally recognized publication such as the Wall Street Journal or Barron's; or

    (c) Written documentation from a registered broker-dealer or investment adviser.

  (3) The written documentation substantiating the values reported by the MCO in the annual and/or quarterly statements shall be maintained by the MCO and readily available for review by the Insurance Administration at financial examinations.

#### Regulation .02-1 Risk-Based Capital Requirements.

*COMAR 31.12.06.02-1*

A. Health Insurer. In this regulation, the term “health insurer” has the meaning stated in Insurance Article, §4-301(g), Annotated Code of Maryland.

B. Requirements Applicable to MCOs. Unless exempted by the Insurance Commissioner, beginning with the Annual Statement filed for the year ending December 31, 2001, an MCO shall comply with the risk-based capital requirements of Insurance Article, Title 4, Subtitle 3, Annotated Code of Maryland, in the same manner as a health insurer.

#### Regulation .03 Application of Maryland Insurance Acquisitions Disclosure and Control Act.

*COMAR 31.12.06.03*

A. Exemption. If the Commissioner determines that this regulation or a part of this regulation is not intended to apply to a managed care organization or affiliate, the Commissioner may exempt the managed care organization or affiliate from this regulation or the part of this regulation.

B. In this regulation, the following terms have the meanings indicated:

  (1) “Holding company” means a person that directly or indirectly controls a managed care organization, or controls a person that controls a managed care organization.

  (2) “Holding company system” means two or more affiliates, at least one of which is a managed care organization.

C. Subject to this regulation, the provisions of Insurance Article, Title 7, Annotated Code of Maryland apply to managed care organizations.

D. Change of Ownership.

  (1) An MCO shall notify the Commissioner within 10 days of any transfer of ownership or of more than an aggregate of 10 percent of the stock or ownership interest in the MCO to a purchaser occurring during any 12-month period.

  (2) An MCO shall comply with the procedures required by Insurance Article, Title 7, Annotated Code of Maryland, before the purchaser may:

    (a) Make a tender for, or a request or invitation for tenders of, or enter into an agreement to exchange securities for, or acquire in the open market or otherwise, any voting security of a domestic MCO or enter into any other such agreement if, after the consummation thereof, that purchaser would, directly or indirectly, or by conversion, or by exercise of any right to acquire, be in control of the domestic MCO; or

    (b) Enter into an agreement to merge or consolidate with, or otherwise to acquire control of, a domestic MCO.

  (3) Before approval of any transfer of ownership, stock, or ownership interest in an MCO, the Commissioner shall consult with the Secretary.

E. Registration Statements.

  (1) Each managed care organization that is a member of a holding company system shall file a registration statement with the Commissioner on or before:

    (a) July 31, 2004; and

    (b) May 1 of each year after 2004.

  (2) The registration statement shall be in a form similar to that required under Insurance Article, §7-603, Annotated Code of Maryland, containing the following current information:

    (a) The corporate and capital structure, general financial condition, ownership, and management of the managed care organization and of any person controlling the managed care organization;

    (b) The identity and relationship of each member of the holding company system;

    (c) Any pledge of the managed care organization's stock, including stock of a subsidiary or controlling affiliate, for a loan made to any member of the holding company system;

    (d) The following agreements in force, and transactions currently outstanding or that have occurred during the previous calendar year between the managed care organization and the managed care organization's affiliates:

      (i) Loans, other investments, purchases, sales, and exchanges of securities of the affiliates by the managed care organization or of the managed care organization by its affiliates;

      (ii) Purchases, sales, and exchanges of assets;

      (iii) Transactions not in the ordinary course of business;

      (iv) Except for managed care contracts entered into in the ordinary course of the managed care organization's business, guarantees or undertakings for the benefit of an affiliate that result in an actual contingent exposure to liability of the managed care organization's assets;

      (v) Management agreements, service contracts, and cost-sharing arrangements;

      (vi) Reinsurance agreements;

      (vii) Dividends and other distributions to shareholders; and

      (viii) Consolidated tax allocation agreements;

    (e) Any other matters about transactions between the managed care organization and its affiliates that the registration statement form requires; and

    (f) A summary outlining all items in the current registration statement that represent changes from the prior registration statement.

  (3) Each affiliate in a holding company system shall give a managed care organization subject to registration under this section that is in the same holding company system complete and accurate information if that information is reasonably necessary to enable the managed care organization to comply with this regulation.

  (4) The Commissioner may allow or require affiliated managed care organizations subject to registration under this section to file a consolidated registration statement.

F. Agreements in Force.

  (1) As part of its initial registration statement, each managed care organization shall report each agreement in force as of December 31, 2002, pertaining to the transactions specified in §E(2)(d) of this regulation, between the managed care organization and any other member of its holding company system.

  (2) Each agreement in force reported under §E(2)(d) of this regulation and otherwise subject to prior approval of the Commissioner, shall be deemed approved as of the date the initial registration is filed with the Commissioner.

  (3) Notwithstanding §F(2) of this regulation, the Commissioner retains the right to request the managed care organization to submit any of the reported agreements in force to the Commissioner for review.

G. A transaction specified in Insurance Article, §7-703(e), Annotated Code of Maryland, between a managed care organization and another member of the same insurance holding company system is subject to the requirements of Insurance Article, §7-703(b)—(d), Annotated Code of Maryland, if the projected annual amount of the transaction equals or exceeds the lesser of 3 percent of the managed care organization's admitted assets, or 25 percent of its surplus as regards policyholders as of the December 31 immediately preceding the transaction.

H. Agreements Between MCOs and Health Care Providers.

  (1) Except as provided in §H(2) of this regulation, the provisions of Insurance Article, §7-703, Annotated Code of Maryland, do not apply to agreements entered into between a managed care organization and a provider of health care services that is a member of the same holding company system, if the rates paid to the provider are regulated by the Health Services Cost Review Commission.

  (2) The Commissioner may require the managed care organization to submit an agreement under this section to the Commissioner for review.

#### Regulation .04 Annual and Interim Financial Reports.

*COMAR 31.12.06.04*

A. On or before March 1 of each year, each MCO operating under a contract with the Department shall file, in duplicate, a report that includes a consolidated financial statement.

B. The Commissioner may require interim statements of the MCOs, on such points as the Commissioner deems necessary and proper at any time during the period between the filing of annual statements.

C. The report shall:

  (1) Cover the MCO and all of its affiliates and subsidiaries;

  (2) Consist of the financial statements of the MCO, and all of its affiliates and subsidiaries, prepared in accordance with statutory accounting principles on a form approved by the Commissioner and certified by an independent certified public accountant as to the financial condition, transactions, and affairs of the MCO and its affiliates and subsidiaries for the immediately preceding calendar year;

  (3) Provide a list of the total compensation from the MCO, including all cash and deferred compensation stock, and stock options in addition to salary, of each member of the board of directors of the MCO, and each senior officer of the MCO, or any subsidiary of the MCO, as designated by the Commissioner;

  (4) Contain loss ratios for medical assistance business as required under Insurance Article, §15-605, Annotated Code of Maryland;

  (5) Be on the form adopted by the Commissioner;

  (6) Be supplemented with a description of any changes in the information submitted with the last previous annual report or with the MCO's original application for financial compliance; and

  (7) Provide any other information or documents necessary to assure compliance with Health-General Article, Title 15, Subtitle 1, Annotated Code of Maryland.

#### Regulation .05 Financial Examination.

*COMAR 31.12.06.05*

A. The Commissioner may make an examination of the operation of a managed care organization as often as the Commissioner deems necessary for the protection of the interest of the people of Maryland, but the examinations may not be less frequent than once every 5 years.

B. The expense of examinations shall be assessed against the MCO being examined in accordance with Health-General Article, §19-718, Annotated Code of Maryland.

#### Regulation .06 Rehabilitation or Liquidation of an MCO.

*COMAR 31.12.06.06*

Any rehabilitation or liquidation of an MCO shall be:

A. Deemed to be the rehabilitation or liquidation of a health maintenance organization; and

B. Subject to the requirements of Health-General Article, §19-706.1, Annotated Code of Maryland.

### Chapter 07 — Required Standard Provisions

**Authority:** Health-General Article, §19-713(f); Insurance Article, §12-203(g); Annotated Code of Maryland

**Administrative History:** Effective date: October 30, 2000 (27:21 Md. R. 1979)

**Administrative History:** Regulation .02B amended effective October 18, 2010 (37:21 Md. R. 1439)

**Administrative History:** Regulation .04 amended effective August 3, 2015 (42:15 Md. R. 1019)

**Administrative History:** Regulation .04N adopted effective October 18, 2010 (37:21 Md. R. 1439)

**Administrative History:** Regulation .05D amended effective November 7, 2005 (32:22 Md. R. 1760)

**Administrative History:** Regulation .05E amended effective August 3, 2015 (42:15 Md. R. 1019)

**Administrative History:** Regulation .05H adopted effective October 18, 2010 (37:21 Md. R. 1439)

**Administrative History:** Regulation .05H amended effective April 22, 2019 (46:8 Md. R. 402)

**Administrative History:** Regulation .06A amended as an emergency provision effective May 9, 2003 (30:11 Md. R. 733); amended permanently effective October 27, 2003 (30:21 Md. R. 1531)

#### Regulation .01 Scope.

*COMAR 31.12.07.01*

This chapter applies to all health maintenance organizations operating in this State.

#### Regulation .02 Definitions.

*COMAR 31.12.07.02*

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

  (1) “Coverage period” means the interval of time the individual contract or group contract provides protection, in exchange for the payment of a particular premium.

  (1-1) Group Contract.

    (a) “Group contract” means a contractual agreement entered into between an HMO and an employer, union, trustee, association, or other organization for the provision of health care services on a prepaid basis to:

      (i) Subscribers of the group contract holder; or

      (ii) Subscribers of the group contract holder and the subscriber's dependents.

    (b) “Group contract” includes a small employer health benefit plan as defined in Insurance Article, §15-1201, Annotated Code of Maryland.

  (2) “Group contract holder” means the entity to whom the group contract is issued.

  (3) “HMO” means a health maintenance organization.

  (4) “Individual contract” means a contractual agreement for the provision of health care services on a prepaid basis entered into between an HMO and a subscriber covering:

    (a) The subscriber;

    (b) The subscriber and the subscriber's dependents; or

    (c) The subscriber's dependents.

  (5) “Member” means an individual entitled to receive health care benefits from the HMO under an individual or group contract.

  (6) “Subscriber” means for:

    (a) Group contracts, the individual who is eligible to be covered under the contract, other than as a dependent, by reason of satisfying the eligibility requirements of the group contract; and

    (b) Individual contracts, the individual to whom the HMO contract is issued.

#### Regulation .03 Required Standard Provisions.

*COMAR 31.12.07.03*

A. A group contract may not be delivered in Maryland unless it contains in substance the provisions:

  (1) Listed in Regulation .04 of this chapter; or

  (2) Which in the opinion of the Commissioner, as compared to the provisions in Regulation .04 of this chapter, are:

    (a) More favorable to the members, or

    (b) At least as favorable to the members and more favorable to the group contract holder.

B. An individual contract may not be delivered in Maryland unless it contains in substance the provisions:

  (1) Listed in Regulation .05 of this chapter; or

  (2) Which in the opinion of the Commissioner, as compared to the provisions in Regulation .05 of this chapter, are at least as favorable to the subscriber and members.

C. Inapplicable and Inconsistent Provisions. If a provision required by Regulation .04 or .05 of this chapter is wholly or partly inapplicable to or inconsistent with the coverage provided by a particular contract, the HMO shall:

  (1) Omit from the contract the inapplicable provision or part of the provision; or

  (2) Modify the inconsistent provision or part of the provision to make it consistent with the coverage provided by the contract.

#### Regulation .04 Group Contract Standard Provisions.

*COMAR 31.12.07.04*

A. Entire Contract; Changes. Each group contract shall contain a provision that specifies:

  (1) Which documents constitute the entire contract; and

  (2) That a change in the contract may not be valid:

    (a) Until approved by an executive officer of the HMO, and

    (b) Unless the approval is endorsed on the contract or attached to the contract.

B. Contestability of the Contract.

  (1) Each group contract shall contain a provision that:

    (a) The contract may not be contested, except for nonpayment of premiums, after it has been in force for 2 years from its date of issue;

    (b) A statement made by a member covered under the contract relating to insurability may not be used in contesting the validity of the coverage with respect to which the statement was made after the coverage has been in force before the contest for a period of 2 years during the member's lifetime;

    (c) Absent fraud, each statement made by an applicant, group contract holder, or member is considered to be a representation and not a warranty; and

    (d) A statement made to effectuate coverage may not be used to avoid the coverage or reduce benefits under the contract unless:

      (i) The statement is contained in a written instrument signed by the group contract holder or member, and

      (ii) A copy of the statement is given to the group contract holder or member.

  (2) The provision required by §B(1) of this regulation does not preclude the assertion at any time of defenses based upon the person's ineligibility for coverage under the contract or upon other provisions in the contract.

C. Notice of Claim.

  (1) Each group contract shall contain a provision describing how and when a claim form can be requested from the HMO.

  (2) If the HMO requires written notice of claim for the HMO to send a claim form to the claimant, the provision shall indicate that:

    (a) The written notice of claim is not required before 20 days after the occurrence or commencement of the loss covered by the contract; and

    (b) The HMO may not invalidate or reduce a claim if it is shown that:

      (i) It was not reasonably possible to give notice within 20 days, and

      (ii) Notice was given as soon as was reasonably possible.

D. Claim Forms. Each group contract shall contain a provision that:

  (1) The HMO shall provide claim forms for filing proof of loss to each claimant or to the group contract holder for delivery to the claimant; and

  (2) If the HMO does not provide the claim forms within 15 days after notice of claim is given, the claimant is considered to have complied with the requirements of the contract as to proof of loss if the claimant submits, within the time fixed in the contract for filing proof of loss, written proof of the occurrence, character, and extent of the loss for which the claim is made.

E. Proofs of Loss. Each group contract shall contain a provision that:

  (1) Written proof of loss shall be furnished to the HMO at its office within 90 days after the date of the loss; and

  (2) Failure to furnish the proof within the time required does not invalidate or reduce any claim if it was not reasonably possible to give proof within the required time, if the proof is furnished as soon as reasonably possible and, except in the absence of legal capacity, not later than 1 year from the time proof is otherwise required.

F. Time of Payment of Claims. Each group contract shall contain a provision that benefits payable under the contract for any loss will be paid not more than 30 days after receipt of written proof of loss.

G. Payment of Claims.

  (1) Each group contract shall contain a provision that all benefits, other than those described in §G(2) of this regulation, will be paid to the health care provider who rendered the services.

  (2) The provision may indicate that, if the member has paid the health care provider for services rendered, benefits will be payable to the member.

H. Legal Action. Each group contract shall contain a provision that an action at law or in equity may not be brought:

  (1) To recover on the contract before the expiration of 60 days after written proof of loss has been furnished in accordance with the requirements of the contract; or

  (2) After the expiration of 3 years after the written proof of loss is required to be furnished.

I. Grace Period.

  (1) Each group contract shall contain in substance the following provision: “Grace Period: A grace period of 30 days will be granted for payment of each premium due after the first premium, unless the HMO does not intend to renew the contract beyond the period for which premiums have been accepted and notice of the intention not to renew is delivered to the group contract holder at least 45 days before the premium is due. During the grace period the contract shall continue in force.”

  (2) Any additional provisions related to the grace period shall be expressly stated in the contract subject to the following limitations:

    (a) Unless the HMO receives a notice of the group contract holder's intention to terminate the contract before the end of the grace period, the HMO may collect premiums for the 30-day grace period;

    (b) If the HMO receives a notice of intention to terminate the contract during the grace period, the HMO may collect premiums for the period beginning on the first day of the grace period until the date on which notice is received or the date of termination stated in the notice, whichever is later; and

    (c) If premiums for the 30-day grace period are paid after the grace period ends, the HMO may charge interest for the premium, but:

      (i) Interest may not begin to accrue during the 30-day grace period, and

      (ii) The interest rate charged may not exceed an effective rate of 6 percent per year.

J. Certificates. Each group contract shall contain a provision that:

  (1) Unless the HMO makes delivery directly to the employee or member, the HMO will provide to the group contract holder, for delivery to each employee or member of the group, a statement that summarizes the benefits and rights which pertain to the members covered under the group contract; and

  (2) If dependents are included in the coverage, only one statement need be issued for each family unit.

K. Addition of Employees/Members. Each group contract shall contain a provision that eligible new employees, members, or dependents may be added periodically to the group originally covered in accordance with the terms of the contract.

L. Misstatement of Age. If the premiums or benefits vary by age, each group contract shall contain a provision specifying an equitable adjustment of premiums or benefits to be made in the event the age of a member has been misstated.

M. Premium Due Date.

  (1) Each group contract shall specify the premium due date.

  (2) The premium due date shall be the date the coverage period begins.

  (3) An HMO may offer each group contract holder the option to pay the premium through an electronic payment.

  (4) If the group contract holder elects an electronic payment, the HMO may not debit or charge the amount of the premium due prior to the premium due date, except as authorized by the group contract holder.

#### Regulation .05 Individual Contract Standard Provisions.

*COMAR 31.12.07.05*

A. Each individual contract shall contain in substance the provisions set forth in Regulation .04C, E, F, G, H, and L of this chapter.

B. Entire Contract; Changes. Each individual contract shall contain in substance the following provision: “Entire contract; changes: This agreement, including the endorsements and the attached papers, if any, constitutes the entire contract. No change in this agreement shall be valid until approved by an executive officer of the HMO and unless such approval is endorsed on the agreement or attached to the agreement. No agent has authority to change this agreement or to waive any of its provisions.”

C. Contestability of the Contract.

  (1) Each individual contract shall contain in substance a provision that:

    (a) The contract may not be contested, except for nonpayment of premiums, after it has been in force for 2 years from its date of issue;

    (b) Absent fraud, each statement made by an applicant or member is considered to be a representation and not a warranty; and

    (c) A statement made to effectuate coverage may not be used to avoid the coverage or reduce benefits under the contract unless:

      (i) The statement is contained in a written instrument signed by the subscriber or member, and

      (ii) a copy of the statement is given to the subscriber or member.

  (2) The provision required by §C(1) of this regulation does not preclude the assertion at any time of defenses based upon the person's ineligibility for coverage under the contract or upon other provisions in the contract.

D. Grace Period.

  (1) If the individual contract is guaranteed renewable for the life of the contract, the contract shall contain in substance the following provision: “Grace period: A grace period of 31 days will be granted for the payment of each premium falling due after the first premium, during which grace period this contract shall continue in force.”

  (2) If the contract gives the HMO the right to refuse renewal, the contract shall contain in substance the following provision: “Grace period: Unless not less than thirty days prior to the premium due date the HMO has delivered to the subscriber or has mailed to the subscriber's last address as shown by the records of the HMO written notice of its intention not to renew this contract beyond the period for which the premium has been accepted, a grace period of 31 days will be granted for the payment of each premium falling due after the first premium, during which grace period this contract shall continue in force.”

  (3) If an individual contract lapses due to nonpayment of premium, an HMO may not charge a premium for the time coverage continues in force under the grace period, except as permitted in the unpaid premiums provision in Regulation .08C of this chapter.

  (4) An HMO must not apply the unpaid premiums provision to recover a premium due for the grace period as described in §D(3) of this regulation, unless the HMO includes the unpaid premiums provision in the individual's contract.

  (5) An individual contract may not require the subscriber to notify the HMO in advance of the subscriber's intention to terminate the individual contract.

E. Reinstatement. Each individual contract shall contain in substance the following provision: “Reinstatement: If any renewal premium is not paid in full within the time granted the subscriber for payment, a later acceptance of premium in full by the HMO or by any agent authorized by the HMO to accept the premium, without requiring a reinstatement application in connection with the acceptance of the premium in full, shall reinstate the contract. However, if the HMO or the agent requires an application for reinstatement and issues a conditional receipt for the premium tendered, the contract will be reinstated upon approval of the application by the HMO or, lacking approval, upon the forty-fifth day following the date of the conditional receipt unless the HMO has previously notified the subscriber in writing of its disapproval of the reinstatement application. The subscriber and HMO shall have the same rights under the reinstated contract as they had under the contract immediately before the due date of the defaulted premium, subject to any provisions endorsed on the contract or attached to the contract in connection with the reinstatement. Any premium accepted in connection with a reinstatement shall be applied to a period for which premium has not been previously paid, but not to any period more than sixty days prior to the date of reinstatement.”

F. Claims Forms. Each individual contract shall contain in substance the following provision: “Claim forms: The HMO, upon receipt of a notice of claim, will furnish to the claimant such forms as are usually furnished by it for filing proofs of loss. If claim forms are not furnished within fifteen days after the giving of notice, the claimant shall be deemed to have complied with the requirements of this contract as to proof of loss upon submitting, within the time fixed in the contract for filing proof of loss, written proof covering the occurrence, the character and the extent of the loss for which claim is made.”

G. Age Limit; Misstatement of Age.

  (1) Each individual contract shall state that the contract will continue in effect until the end of the period for which the HMO has accepted the premium if an individual contract establishes, as an age limit or otherwise, a date after which the coverage provided by the contract will not be effective and:

    (a) The date falls within a period for which the HMO accepts a premium for the contract; or

    (b) The HMO accepts a premium for the contract after the date specified in this section.

  (2) Each individual contract shall state that the liability of the HMO is limited to the refund, on request, of the premiums paid for the period not covered by the contract if the age of the member is misstated and according to the correct age of the member, the coverage provided by the contract would:

    (a) Not have become effective; or

    (b) Have ceased before the acceptance of the premium for the contract.

H. Premium Due Date.

  (1) Each individual contract shall specify the premium due date.

  (2) The premium due date shall be no earlier than the date the coverage period begins.

  (3) An HMO may offer each subscriber the option to pay the premium through an electronic payment.

  (4) If the subscriber elects an electronic payment, the HMO may not debit or charge the amount of the premium due prior to the premium due date, except as authorized by the subscriber.

#### Regulation .06 Limitations and Exclusions.

*COMAR 31.12.07.06*

A. Crime.

  (1) An individual or group contract may not include a limitation or exclusion for loss to which a contributing cause was the member's commission of or attempt to commit a crime.

  (2) An individual or group contract may not include a limitation or exclusion for loss for which a contributing cause was the commission of or the attempt to commit a crime by an individual other than the member.

B. Illegal Occupation. An individual or group contract may not include a limitation or exclusion for loss to which a contributing cause was the member being engaged in an illegal occupation.

C. Intoxicants and Narcotics or Use of Intoxicants or Narcotics.

  (1) An individual or group contract may not include a limitation or exclusion for loss sustained or contracted in consequence of the member being intoxicated or under the influence of any drug.

  (2) An individual or group contract may not include a limitation or exclusion for loss due to:

    (a) The use of alcohol;

    (b) The use of drugs or narcotics; or

    (c) Alcoholism or drug addiction.

D. Preexisting Conditions. An individual or group contract may not include a limitation or exclusion for a preexisting condition.

#### Regulation .07 Group Contract Optional Provisions.

*COMAR 31.12.07.07*

A. An HMO may include in group contracts any of the optional provisions described in §§C and D of this regulation.

B. An HMO may not include in a group contract an optional provision dealing with the same subjects set forth in §§C and D of this regulation if the provision is drafted in a manner that is less favorable to the group contract holder, subscriber, or member than the corresponding optional provision set forth in §§C and D of this regulation.

C. Physical Examination.

  (1) An HMO may include a provision in a group contract giving the HMO the right to examine the person of the member when and as often as it may reasonably require during the pendency of a claim under the contract.

  (2) If the HMO includes the provision described in §C(1) of this regulation, the provision shall indicate that any physical examination required by the HMO will be performed at the expense of the HMO.

D. Arbitration.

  (1) An HMO may include a provision in a group contract giving the group contract holder or the member the option of entering binding arbitration to settle a dispute with the HMO.

  (2) If the HMO includes the provision described in §D(1) of this regulation, the provision may not require the group contract holder or the member to enter binding arbitration.

#### Regulation .08 Individual Contract Optional Provisions.

*COMAR 31.12.07.08*

A. An HMO may include in an individual contract any of the optional provisions described in Regulation .07C and D of this chapter and §C of this regulation.

B. An HMO may not include in an individual contract an optional provision dealing with the same subjects set forth in Regulation .07C and D of this chapter and §C of this regulation if the provision is drafted in a manner that is less favorable to the subscriber or member than the corresponding optional provision set forth in Regulation .07C and D of this chapter and §C of this regulation.

C. Unpaid Premiums. An individual contract may contain the following provision: “Unpaid premiums: Upon the payment of a claim under this contract, any premium then due and unpaid or covered by any note or written order may be deducted from the claim payment.”

### Chapter 08 — Payments to Nonparticipating Providers

**Authority:** Health General Article, §19-710.1, Annotated Code of Maryland

**Administrative History:** Effective date:

**Administrative History:** Regulations .01—.06 adopted as an emergency provision effective January 1, 2010 (37:4 Md. R. 337); adopted permanently effective March 8, 2010 (37:5 Md. R. 433)

#### Regulation .01 Applicability.

*COMAR 31.12.08.01*

This chapter applies to covered services paid by health maintenance organizations to nonparticipating providers for services provided on or after January 1, 2010.

#### Regulation .02 Definitions.

*COMAR 31.12.08.02*

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

  (1) “Berenson-Eggers Type of Service Code” has the meaning stated in Health-General Article, §19-710.1, Annotated Code of Maryland.

  (2) “CPT code” means the Current Procedural Terminology Code maintained and distributed by the American Medical Association, including its codes and modifiers, and codes for anesthesia services.

  (3) “Enrollee” has the meaning stated in Health-General Article, §19-710.1, Annotated Code of Maryland.

  (4) “Evaluation and management services” has the meaning stated in Health-General Article, §19-710.1, Annotated Code of Maryland.

  (5) “Geographic area” means each geographic area as published by the Centers for Medicare and Medicaid Services.

  (6) “HCPCS” means the Healthcare Common Procedure Coding System, a set of health care procedure codes based on the American Medical Association's Current Procedural Terminology and other services such as ambulance services, prosthetic devices, other supplies, and non-physician services that are not covered by CPT codes but are recognized and maintained by the Centers for Medicare and Medicaid Services.

  (7) “Health maintenance organization” has the meaning stated in Health-General Article, §19-701, Annotated Code of Maryland.

  (8) “Medicare Economic Index” has the meaning stated in Health-General Article, §19-710.1, Annotated Code of Maryland.

  (9) “Nonparticipating provider” means a provider other than a hospital or trauma physician who is not included on the provider panel of a health maintenance organization.

  (10) “Participating provider” means a provider other than a hospital or trauma physician who is included on the provider panel of a health maintenance organization.

  (11) “Provider” means a health care practitioner licensed, certified, or otherwise authorized by law to provide health care services.

  (12) “Provider panel” has the meaning stated in Insurance Article, §15-112, Annotated Code of Maryland.

  (13) “Reference year” means, for services provided in a particular calendar year, the period beginning with July 1 of the second previous calendar year through June 30 of the previous calendar year.

  (14) “Similarly licensed provider” has the meaning stated in Health-General Article, §19-710.1, Annotated Code of Maryland.

  (15) “Trauma physician” has the meaning stated in Health-General Article, §19-710.1, Annotated Code of Maryland.

#### Regulation .03 Payment to Nonparticipating Providers.

*COMAR 31.12.08.03*

A. A health maintenance organization shall calculate the amount owed to a nonparticipating provider for covered evaluation and management services provided to an enrollee in accordance with Regulation .05 of this chapter.

B. A health maintenance organization shall calculate the amount owed to a nonparticipating provider for covered services other than evaluation and management services provided to an enrollee in accordance with Regulation .06 of this chapter.

#### Regulation .04 Annual Rate Schedule.

*COMAR 31.12.08.04*

A. Each year, beginning with January 1, 2010, each health maintenance organization shall develop an annual rate schedule for each geographic area.

B. The annual rate schedule required by §A of this regulation shall include a rate for each occurrence of a CPT code or HCPCS code that describes covered services for each type of similarly licensed provider in the same geographic area derived in accordance with the formula specified in §C of this regulation.

C. The rate in the annual rate schedule for each CPT code or HCPCS code shall be developed as follows:

  (1) For each type of similarly licensed provider, the rate paid for the CPT code or HCPCS code shall be equal to the total amount allowed for the occurrences of the CPT code or HCPCS code to participating providers who are similarly licensed providers in the same geographic area during the reference year divided by the total number of occurrences paid for the same CPT code or HCPCS code to participating providers who are similarly licensed providers in the same geographic area during the reference year.

  (2) For any new CPT code or HCPCS code, the rate paid for the CPT code or HCPCS code shall be equal to 125 percent of the rate paid to a similarly licensed provider in the same geographic area.

D. By not later than December 31 of each year, each health maintenance organization shall provide written certification to the Insurance Commissioner, signed by an individual with the authority to bind the health maintenance organization that the:

  (1) Annual rating schedule applicable to the year in which the certification is made is, to the best of that individual's knowledge, information, and belief, compliant with this regulation; and

  (2) Individual making the certification has undertaken an adequate inquiry to make the required certification.

#### Regulation .05 Evaluation and Management Services.

*COMAR 31.12.08.05*

A. If a nonparticipating provider submits a claim to a health maintenance organization for a covered evaluation and management service, the health maintenance organization shall pay the nonparticipating provider, less any applicable copayment, coinsurance or deductible amount, an amount not less than the greater of:

  (1) 125 percent of the fee for the covered evaluation and management service in the annual fee schedule applicable to similarly licensed providers in the same geographic area; or

  (2) 140 percent of the fee for the covered evaluation and management service paid by Medicare as published by the Centers for Medicare and Medicaid Services as of August 1, 2008, inflated by the four quarter moving average percent change in the Medicare Economic Index from 2008 to the current year.

B. The Maryland Health Care Commission may publish on its website each year by October 15:

  (1) A list of covered services that qualify as Berenson-Eggers Type of Service Code evaluation and management services; and

  (2) The inflation factor applicable for inflating 2008 fees to the current year using four quarter moving average percent change for the previous calendar year second quarter.

#### Regulation .06 Other Covered Services.

*COMAR 31.12.08.06*

If a nonparticipating provider submits a claim to a health maintenance organization for a covered service other than a covered evaluation and management service, the health maintenance organization shall pay the nonparticipating provider, less any applicable copayment, coinsurance or deductible amount, an amount not less than 125 percent of the rate for the covered service in the annual rate schedule applicable to similarly licensed providers in the same geographic area.