Section 98-1.10 - Transactions within a holding company system affecting controlled HMO's

98-1.10 Transactions within a holding company system affecting controlled MCOs.

(a) Transactions within a holding company system to which a controlled MCO is a party shall be subject to the following guidelines:

(1) the terms of the financial transaction shall be fair and equitable to the MCO at the time of the transaction;

(2) charges or fees for services performed shall be reasonable; and

(3) expenses incurred and payments received shall be allocated to the MCO on an equitable basis in conformity with customary accounting practices consistently applied.

(b) The books, accounts and records of each party to all such transactions shall be so maintained as to clearly and accurately disclose the nature and details of the transactions, including such accounting information as is necessary to support the reasonableness of the charges or fees to the respective parties.

(c) The commissioner's and, except in the case of PHSP, HIV SNP or PCPCP, the superintendent's prior approval shall be required for the following transactions between a controlled MCO and any person in its holding company system: sales, purchases, exchanges, loans, extensions of credit or investments the aggregate of which involves five percent or more of the MCO's admitted assets at last year-end. Thirty days prior notice to the commissioner and, except in the case of a PHSP, HIV SNP or PCPCP, the superintendent, is required before entering into the following transactions between a controlled MCO and any person in its holding company system: a reinsurance agreement or an agreement for rendering services on a regular or systematic basis, other than medical or management services that require prior approval under this Subpart. Such transactions may become effective unless the commissioner or the superintendent has disapproved the transaction within such period.

(d) The commissioner, in reviewing transactions pursuant to subdivision (c) of this section, shall consider whether they comply with the standards set forth in subdivision (a) of this section, and whether they may adversely affect the interests of enrollees.

(e) Nothing herein shall prevent a corporation licensed under article 43 of the Insurance Law from exercising its rights and undertaking transactions authorized by such law, provided that no such transaction shall affect or involve the corporation's Public Health Law article 44 business or line of business or resources thereof, without compliance with the provisions of this section.

Effective Date: 
Wednesday, June 29, 2005
Doc Status: 
Complete