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> Document 283 : INS 99-14 : Hearing Decision
February 1, 2000
VIA HAND DELIVERY Alessandro A. Iuppa Superintendent of Insurance c/o Lyndy Morgan Docket No. INS-99-14 Maine Department of Professional & Financial Regulation Bureau of Insurance 124 Northern Avenue Gardiner, Maine 04345
Dear Superintendent Iuppa: Pursuant to your Order of January 6, 2000, on behalf of Anthem Insurance Companies, Inc., and its subsidiary to be formed, Anthem Health Plans of Maine, Inc. ( " Anthem BCBS " ), I hereby submit Anthem BCBS ’ s Application for Certificate of Authority to Operate a Health Maintenance Organization (the " Application " ). Simultaneous with the submission of the Application to you, a copy of the Application has been delivered to Kevin Concannon, Commissioner of the Department of Human Services ( " Commissioner " ). As you know, the application process requires the Commissioner to certify that the HMO has received a certificate of need pursuant to 22 M.R.S.A. § § 301-325 or that a certificate of need is not required. 24-A M.R.S.A. § 4204(2-A)(A). If no certificate of need is required, the applicant must seek from the Commissioner a certificate that several requirements set forth in 24-A M.R.S.A. § 4204(2-A)(B) have been met. As no certificate of is required in connection with the Acquisition, Anthem has sought from the Commissioner the certification that the requirements of 24-A M.R.S.A. § 4204(2-A)(B) have been met. Attached to the Application as Exhibit A is Blue Cross Blue Shield of Maine ’ s ( " BCBSME " ) Quality Improvement Program Description. As stated in the enclosed letter from Robert Frank, Attorney for BCBSME, BCBSME asserts confidential treatment for this document, which has been separately bound with a red cover pursuant to the Protective Order issued on October 19, 1999 ( " Protective Order " ). A Motion asserting the reasons for confidential treatment for the Quality Improvement Program Description is also enclosed. Finally, certain documents incorporated in this Application by reference and previously submitted to the Superintendent in connection with this proceeding have been (1) designated by Anthem or BCBSME as confidential pursuant to the Protective Order issued by the Superintendent on October 19, 1999 ( " Protective Order " ), and/or (2) determined by the Superintendent to be confidential pursuant to the Protective Order. Incorporation of those documents by reference in the Application does not waive or modify the assertion of confidentiality made for such documents, and this Application is made with the understanding that the Superintendent and the Bureau staff will continue to treat all such documents as confidential pursuant to the Protective Order unless the Superintendent issues a ruling otherwise. Please let me know if I can be of further assistance, and many thanks to you and the Bureau staff for your time and effort expended in this proceeding.
Enclosures cc: Kevin Concannon, Commissioner of Department of Human Services (via hand delivery) Robert S. Frank, Esq. (via hand delivery) Judith Chamberlain, Esq. (via hand delivery) William Laubenstein, Esq. (via hand delivery) Michele M. Garvin, Esq. (via email) Gordon H. Smith, Esq. (via email) Gregory A. Brodek, Esq. (via email) Joseph P. Ditre, Esq. (via email) Robert I. Goldman (via email) Bonnie Post (via email) John Dieffenbacher-Krall (via email) Donald E. Quigley, Esq. (via email) Sandra L. Parker, Esq. (via email) Kellie P. Miller, M.S. (via email) Edward Miller (via email)
STATE OF MAINE DEPARTMENT OF PROFESSIONAL AND FINANCIAL REGULATION BUREAU OF INSURANCE
SECOND SUPPLEMENT TO INITIAL CONSOLIDATED FILING
February 1, 2000
Anthem Health Plans of Maine, Inc. Application for Certificate of Authority to Operate a Health Maintenance Organization
INTRODUCTORY STATEMENT
Prior to the filing of this Application for Certificate of Authority to Operate a Health Maintenance Organization, Anthem Insurance Companies, Inc. ( " Anthem " ), in the name of its wholly owned subsidiary to be formed, Anthem Health Plans of Maine, Inc. (d/b/a Anthem Blue Cross Blue Shield) ( " Anthem BCBS " ), has filed for approval of the acquisition (the " Acquisition " ) by Anthem, through Anthem BCBS, of substantially all of the assets and liabilities of Associated Hospital Service of Maine, d/b/a Blue Cross and Blue Shield of Maine ( " BCBSME " ), pursuant to the Asset Purchase Agreement dated July 19, 1999 between Anthem and BCBSME (the " Asset Purchase Agreement " ). The Acquisition involves, inter alia, Anthem BCBS ’ s acquisition of BCBSME ’ s HMO line of business ( " HMO Maine " ). In the Notice of Hearing for this proceeding, the last issue presented was whether " the proposed acquisition of control of BCBSME and its HMO Maine line of business by Anthem requires compliance with the filing and approval requirements of the Maine Insurance Code with respect to a health maintenance organization (24-A M.R.S.A. § § 4203-04.) " (Notice of Hearing, dated Nov. 5, 1999, Section III, p. 4, ¶ 26.) By letter dated November 15, 1999, the Superintendent of Insurance ( " Superintendent " ) directed any party who believed that " Anthem is required to make the filings required by 24-A M.R.S.A. § 4203-4204 to file a written legal brief supporting its contention. " After receiving briefs on the subject from the Attorney General and three Intervenors, as well as a joint response thereto from BCBSME and Anthem, the Superintendent, in his " Order Requiring Anthem Health Plans of Maine, Inc. to Satisfy the Requirements of 24-A M.R.S.A. § § 4203-4204 " of January 6, 2000, required Anthem BCBS " to comply with the requirements of [24-A M.R.S.A. § § 4203-4204] in order to operate an HMO as a line of business. " Anthem hereby applies, in the name and on behalf of Anthem BCBS, pursuant to 24-A M.R.S.A. Section 4203 and all other applicable law, for a certificate of authority to operate the HMO line of business currently operated by BCBSME. This filing provides the Superintendent with the information and materials needed to assess whether Anthem BCBS meets the requirements of Sections 4203 and 4204 to operate an HMO.
Anthem BCBS ’ s HMO will be comprised of the NCQA-accredited HMO products and operations of BCBSME. BCBSME offers both lock-in and point-of-service HMO products to groups located throughout the State of Maine and the Standard and Basic coverages to individual and small groups as required by law. BCBSME ’ s provider networks are the most comprehensive in the State. BCBSME has managed care contracts with 988 primary care physicians, 1370 specialists and all Maine hospitals as well as with skilled nursing facilities, home health agencies, imaging centers and infusion providers. BCBSME also offers a network of 792 mental health clinicians developed through Green Spring and a statewide network of 240 retail pharmacies through Merck-Medco. Other aspects of the BCBSME HMO model are described in the Provider Contracting and Health Care Management segments in Item 5 of the Form A, Statement Regarding the Acquisition of Control of Domestic Insurers ( " Form A " ), found at Tab 6 of the Initial Consolidated Filing dated September 15, 1999 ( " Initial Consolidated Filing " ).
As part of the Acquisition, Anthem will acquire substantially all of the assets and assume substantially all of the liabilities of HMO Maine, as more specifically set forth in the Asset Purchase Agreement and as it may be amended. Anthem BCBS represents that, at the Closing of the Acquisition, it intends to acquire and operate HMO Maine without material change, adhering to all pertinent rules and regulations, unless: (1) specific approval for a change is sought from the Bureau of Insurance which would currently require an approval were BCBSME making it; or (2) a change in structure or operation is specifically identified in Anthem ’ s submissions to the Bureau in connection with this proceeding. This representation includes the intention to maintain BCBSME ’ s currently existing Quality Improvement Program and Standards, Access Plan and provider networks, provider credentialing standards, utilization review standards, grievance and appeals procedures and benefits plans. Anthem has also agreed in the Asset Purchase Agreement to exercise commercially reasonable efforts to maintain NCQA accreditation for Anthem BCBS for at least two years following the Acquisition. In addition, as stated more fully in Item 5 of Form A, Anthem ’ s regional management team in Maine, New Hampshire, and Connecticut will examine operations on a regional basis. It is Anthem ’ s objective over time, through consolidation on a regional or national basis, to improve organizational efficiencies and create systems that are equally or more effective than those currently in place. All responses in this Application are made with the qualification that Anthem will undertake continuing efforts to meet its objective to improve the efficiency and effectiveness of its systems and organizations. Finally, certain documents incorporated in this Application by reference and previously submitted to the Superintendent in connection with this proceeding have been (1) designated by Anthem or BCBSME as confidential pursuant to the Protective Order issued by the Superintendent on October 19, 1999 ( " Protective Order " ), and/or (2) determined by the Superintendent to be confidential pursuant to the Protective Order. Incorporation of those documents by reference herein does not waive or modify the assertion of confidentiality made for such documents, and this Application is made with the understanding that the Superintendent and the Bureau staff will continue to treat all such documents as confidential pursuant to the Protective Order unless the Superintendent issues a ruling otherwise.
STANDARDS AND REQUIREMENTS TO BE MET 3A. A copy of the basic organizational document, if any, of the applicant such as the articles of incorporation, articles of association, partnership agreement, trust agreement or other applicable documents and all amendments thereto: This information can be found in the " Proposed Certificate of Organization of Anthem Health Plans of Maine, Inc. " , at Tab 5, Exhibit B of the Initial Consolidated Filing. 3B. A copy of the bylaws, rules and regulations, or similar document, if any, regulating the conduct of the internal affairs of the applicant. This information can be found in the " Proposed Bylaws of Anthem Health Plans of Maine, Inc. " , at Tab 5, Exhibit C of the Initial Consolidated Filing. 3C. A list of the names, addresses and official positions of the persons who are to be responsible for the conduct of the affairs of the applicant, including all members of the board of directors, board of trustees, executive committee or other governing board or committee, the principal officers in the case of a corporation and the partners or members in the case of a partnership or association. The list is part of the Form A at Tab 6, item 3, of the Initial Consolidated Filing. 3D. A copy of any contract made or to be made between any providers or persons listed in paragraph C and the applicant. BCBSME provider contracts, which Anthem BCBS will assume upon the closing of the Acquisition, are on file at the Bureau of Insurance. Anthem BCBS will maintain the HMO operations of BCBSME, without material modification, unless prior approval of such modification is obtained from the Bureau of Insurance, if required by law or regulation, adhering to all pertinent rules and regulations. There are no contracts between Anthem BCBS and persons listed in paragraph C. 3E. A statement generally describing the health maintenance organization, its health care services, facilities and personnel. Anthem BCBS ’ s HMO will be comprised of the NCQA-accredited HMO products and operations of BCBSME. BCBSME offers both lock-in and point-of-service HMO products to groups located throughout the state of Maine and the Standard and Basic coverages to individual and small groups as required by law. BCBSME ’ s provider networks are the most comprehensive in the state. BCBSME has managed care contracts with 988 primary care physicians, 1370 specialists and all Maine hospitals as well as with skilled nursing facilities, home health agencies, imaging centers and infusion providers. BCBSME also offers a network of 792 mental health clinicians developed through Green Spring and a statewide network of 240 retail pharmacies through Merck-Medco. Other aspects of the BCBSME HMO model are described in the Provider Contracting and Health Care Management segments in Item 5 of the Form A. 3F. A copy of the form of evidence of coverage to be issued to the enrollees. Certificates of Coverage, including HMO Maine (form #048454), HMO Choice (#029200 R11/93), Individual HMO Basic (#052106) and Standard (#052105), Group HMO Basic (#028951) and Standard (#028950), and Blue Choice (#030171), are on file at the Bureau of Insurance. Anthem BCBS will maintain BCBSME's current Certificates of Coverage without material modification, unless prior approval of such modification is obtained from the Bureau of Insurance, if required by law or regulation. 3G. A copy of the form of the group contract, if any, which is to be issued to employers, unions, trustees or other organizations. The BCBSME Group Account Agreements (form #048395, 048480, 048762, and 048164) are on file at the Bureau of Insurance. Anthem BCBS will maintain BCBSME's current group contracts without material modification, unless prior approval of such modification is obtained from the Bureau of Insurance, if required by law or regulation. 3H. Financial statements showing the applicant's assets, liabilities and sources of financial support. If the applicant's financial affairs are audited by independent certified public accountants, a copy of the applicant's most recent regular certified financial statement shall be deemed to satisfy this requirement, unless the superintendent directs that additional or more recent financial information is required for the proper administration of this chapter. As a domestic insurer yet to be formed, Anthem BCBS has no financial statements, but its Pro Forma Income Statements were submitted as confidential documents in Anthem ’ s First Supplement to the Initial Consolidated Filing on January 4, 2000 ( " Pro Forma Income Statements " ). In addition, Anthem ’ s financial statements were provided in the Initial Consolidated Filing at Tab 6, Exhibits G through M. 3I. A financial feasibility plan that includes detailed enrollment projections, the methodology for determining premium rates to be charged during the first 12 months of operations certified by an actuary or other qualified person, a projection of balance sheets, cash flow statements showing any capital expenditures, purchase and sale of investments and deposits with the State, income and expense statements anticipated from the start of operations until the organization has had net income for at least one year and a statement of the sources of working capital and any other sources of funding. Information regarding premium rates is provided in the Comparative Premium Rate Analysis filed with the Bureau on November 4, 1999 ( " Comparative Premium Rate Analysis " ). Financial projections for Anthem BCBS were provided in the Pro Forma Income Statements. 3J. A power of attorney duly executed by such applicant, if not domiciled in this State, appointing the superintendent and his successors in office, and duly authorized deputies, as the true and lawful attorney of such applicant in and for this State upon whom all lawful process in any legal action or proceeding against the health maintenance organization on a cause of action arising in this State may be served. As a Maine domiciliary,pursuant to 24-A M.R.S.A. § 421, Anthem hereby agrees to cause Anthem BCBS to appoint James B. Zimpritch, Esq., its Clerk, to serve as its agent to receive service of legal process issued against it in Maine. After incorporation of Anthem BCBS, Anthem BCBS will provide to the Superintendent a copy of such appointment along with proof of the agent ’ s consent to the appointment and a copy of a resolution of the board of directors of Anthem BCBS, showing that those officers who executed the appointment were duly authorized to do so on behalf of the insurer. 3K. A statement reasonably describing the geographic area or areas to be served. Anthem BCBS intends to serve the same areas that HMO Maine currently serves. See also Tab 6, item 5, Benefit Design, Marketing and Sales, of the Initial Consolidated Filing. 3L. A description of the complaint and grievance procedures to be utilized as required under section 4303, subsection 4 and section 4211. Anthem BCBS intends to continue to use BCBSME's current HMO operations with regard to the grievance and appeals procedures without material modification, unless prior approval of such modification is obtained from the Bureau of Insurance, if required by law or regulation. BCBSME Grievance and Appeals procedures are set forth in the Certificates of Coverage and Access Plan on file with the Bureau of Insurance. 3M. A description of the proposed quality assurance program, including the formal organization structure, methods for developing criteria, procedures for comprehensive evaluation of the quality of care rendered to enrollees, and processes to initiate corrective action and reevaluation when deficiencies in provider or organizational performance are identified. Anthem BCBS intends to continue to use the current Quality Improvement Program used by BCBSME without material modification, unless prior approval of such modification is obtained from the Bureau of Insurance, if required by law or regulation. BCBSME ’ s Quality Improvement Program Description is attached as Exhibit A. The Quality Improvement Program Description is a confidential document and it has been removed from this version of the Application. 3N. A description of the mechanism by which enrollees will be afforded an opportunity to participate in matters of policy and operation under section 4206, subsection 2. ( § 4206, subsection 2, reads: " Such governing body shall establish a mechanism to afford the enrollees an opportunity to participate in matters of policy and operation through the establishment of advisory panels, by the use of advisory referenda on major policy decisions or through the use of other mechanisms. " ) Anthem BCBS intends to maintain BCBSME's current mechanisms for enrollee participation, which follow, without material modification, unless prior approval of such modification is obtained from the Bureau of Insurance, if required by law or regulation.
I. rights and Responsibilities: BCBSME uses a Member rights and Responsibilities statement and a brochure entitled " Your rights and Responsibilities " to provide insured members with a number of opportunities for input. The " Your rights and Responsibilities " brochure, which is mailed to each subscriber, includes the member's right to " make suggestions, ask questions, or express concerns through our customer service department. " The brochure is also included in the plan's Welcome Booklet to advise members of their right to participate in the decision-making regarding their health care.
II. Customer Service: Member Inquiries and Complaints: Member inquiries and complaints are documented on the On-line Record of Encounter (ROE) system managed by Customer Service. This system tracks all member inquiries, complaints and appeals. The system is detailed in Blue Cross's " Member Complaint and Appeal Policy " . The ROE data is reported to the organization's quality committees by " reason for inquiry " , which allows the committees to monitor current quality initiative results and address needed improvements.
III. Member Complaint and Appeal Policy: BCBSME ’ s Member Complaint and Appeal Policy and procedures are set forth in the Certificates of Coverage and Access Plan on file with the Bureau of Insurance. In the member's Certificate, the plan demonstrates a commitment to the member's right to voice a complaint or appeal by clearly advising the member " How to Appeal Our Decision " and file a Level One or Level Two Appeal.
IV. Surveys and Focus Groups: Surveys are used to assess satisfaction levels of members and providers. The survey results are evaluated by the plan's quality committees and used to form the basis of many quality improvement activities. An annual Gallup Survey and many internally-produced member surveys (e.g., disenrollment surveys) also include open-ended questions allowing members an opportunity to provide input for improvement. We will also conduct focus groups sessions periodically to discuss our operations, services and benefits with select groups of members to hear their views on the plan. This valuable input is used in the same way that survey data is used to form the basis for improvements to our products and services.
V. Quality Improvement Process: The Quality Committees of BCBSME ensure that a priority-setting process for quality activities is guided by an analysis of satisfaction data (including member and provider survey, focus group, inquiry and complaint, and operational data) and epidemiological and demographic analyses (including claims, pharmacy, member survey, and state data). Quality improvement activities are chosen to reflect satisfaction requirements, burden of illness, current QI infrastructure, HEDIS and NCQA requirements, and business requirements. Quality improvement activity updates and progress against goals are communicated on a regular basis through multi-disciplinary quality committees that include member and provider representation.
VI. Member Relations Committee: The Member Relations Committee is comprised of managed care members, group decision makers, Primary Care Physicians and BCBSME staff. The committee's purpose is to raise awareness of members' needs and concerns within the plan. These concerns are then incorporated into action plans to improve the service provided to our members. By having the four disciplines represented, discussions lead to solutions and are aimed at increasing member satisfaction. The committee's composition ensures that improvements include and satisfy our members, physicians, group decision makers and can be accommodated by BCBSME. The committee has been very willing to discuss issues of concern and work towards solutions that satisfy all parties involved. This committee is part of our Quality Committee structure and is instrumental in assisting in our service quality improvement initiatives. 3O. A schedule of rates with supporting actuarial and other data. BCBSME group rates and individual product rates are on file with the Maine Bureau of Insurance. At closing, Anthem BCBS will assume those rates in contracts with HMO Maine enrollees. Further information regarding premium rates is provided in the Comparative Premium Rate Analysis. 3P. A description of a procedure to develop, compile, evaluate and report statistics relating to the cost of its operations, the pattern of utilization of its services, the availability and accessibility of its services and such other matters as may be reasonably required by the Commissioner of Human Services. BCBSME has leading edge applications to report cost of managed care operations, utilization, and access and availability. Mainframe based claims processing and accounting systems provide sophisticated data capture and analytic capability. BCBSME monitors and evaluates utilization from multiple perspectives including by product line, provider risk entity, primary care physician, and employer group, in addition to NCQA's selected HEDIS measures. Network availability reporting is conducted regularly by Geo-Access reporting that links managed care members to network primary and select specialty care practitioners to confirm that established accessibility standards are being met. Accessibility of services reporting is conducted to assure the accessibility of primary care, urgent care and member services. Practitioner compliance with established timeliness standards is measured by on-site visits, patient surveys, complaints and access audits. These data are complied and reported on a physician-specific basis for consideration in the recredentialing process. Member Service telephone accessibility is reported by an ACD (automatic call distribution) system. This reporting is generated on an hourly basis and is aggregated and analyzed regularly to ensure telephone accessibility standards are being met. As stated in the Introductory Statement and described in its business plan (Item 5 of Form A), it is Anthem ’ s objective over time, through consolidation on a regional or national basis, to bring efficiencies of scale to its operations that equal or exceed the accuracy and analytic capabilities of the current BCBSME systems. 3Q. Such other information as the superintendent may reasonably require to make the determinations required in section 4204. Please refer to § 4204 below. 3R. A description of procedures to be implemented to meet the protection against insolvency requirements in section 4204, subsection 2-A, paragraph D and section 4204-A. Anthem BCBS intends to comply with the NAIC ’ s Risk Based Capital (RBC) standards for Managed Care Organizations (MCOs). After the Closing, Anthem intends to bring Anthem BCBS ’ s MCORBC up to over 100% of the bench mark. See also response to Section 4204(7), infra. 3S. A list of the names and addresses of all physicians and facilities with which the health maintenance organization has or will have agreements. If products are offered that pay full benefits only when providers within a subset of the contracted physicians or facilities are utilized, a list of the providers in that limited network must be included, as well as a list of the geographic areas where the products are offered. Anthem BCBS will continue to maintain the provider networks established by BCBSME . A provider directory is included in BCBSME ’ s Access Plan, which is on file at the Bureau of Insurance. Anthem BCBS will comply with applicable modification notice requirements with respect to network changes.
II. 24-A M.R.S.A. § 4204: 2-A A. The Commissioner of Human Services certifies that the health maintenance organization has received a certificate of need or that a certificate of need is not required pursuant to Title 22, chapter 103. 2-A B. If the Commissioner of Human Services has determined that a certificate of need is not required, the commissioner makes a determination and provides a certification to the superintendent that the following requirements have been met.
2-A B(6). The health maintenance organization shall record proceedings of formal quality assurance program activities and maintain documentation in a confidential manner. Quality assurance program minutes must be available to the Commissioner of Human Services. Anthem BCBS will comply with this requirement. 2-A B(7). The health maintenance organization shall ensure the use and maintenance of an adequate patient record system that facilitates documentation and retrieval of clinical information to permit evaluation by the health maintenance organization of the continuity and coordination of patient care and the assessment the quality of health and medical care provided to enrollees.
See the Quality Improvement Program Description attached hereto as Exhibit A.
2-A B(8). Enrollee clinical records must be available to the Commissioner of Human Services or an authorized designee for examination and review to ascertain compliance with this section, or as considered necessary by the Commissioner of Human Services. Anthem BCBS will comply with this requirement. 2-A B(9). The organization must establish a mechanism for periodic reporting of quality assurance program activities to the governing body, providers and appropriate organization staff. See the Quality Improvement Program Description attached hereto as Exhibit A.
2-A C. The health maintenance organization conforms to the definition under section 4202-A, subsection 10.
The HMO Maine line of business to be assumed and operated by Anthem BCBS conforms to the definition under Section 4202-A(10), as demonstrated by the body of documents on file with the Bureau of Insurance, in particular the Certificates of Coverage and the Access Plan. Anthem BCBS will continue to use those documents without material modification, unless prior approval of such modification is obtained from the Bureau of Insurance, if required by law or regulation.
2-A D. The health maintenance organization is financially responsible, complies with the minimum surplus requirements of this section and, among other factors, can reasonably be expected to meet its obligations to enrollees and prospective enrollees. Anthem BCBS will be a wholly-owned subsidiary of Anthem, a mutual insurance company domiciled in Indiana. Anthem and its affiliates have over 6.2 million members in seven states and, as of February 2, 2000, expect to have approximately 1.7 billion in surplus on a consolidated basis. Anthem BCBS will be acquiring the complete operations of BCBSME, which consist of, inter alia, a fully mature and highly rated HMO operation. In addition, Anthem BCBS will comply with the statutory minimum surplus requirements. See also response to Section 4204(7), infra.
2-A E. The enrollees are afforded an opportunity to participate in matters of policy and operation pursuant to section 4206. See response to Section 4203(3N) above. 2-A F. Nothing in the proposed method of operation, as shown by the information submitted pursuant to section 4203 or by independent investigation, is contrary to the public interest. Anthem BCBS represents that it will maintain the HMO operations of BCBSME, without material modification, unless prior approval of such modification is obtained from the Bureau of Insurance, if required by law or regulation, adhering to all pertinent rules and regulations. BCBSME currently holds the highest accreditation level offered by the NCQA and HMO Maine is among the highest rated HMOs in national surveys. Anthem has committed contractually to use commercially reasonable efforts to maintain BCBSME ’ s NCQA accreditation for two years. See the Asset Purchase Agreement, Initial Consolidated Filing, at Tab 6, Exhibit A, Section 5.17. 2-A G. Any director, officer, employee or partner of a health maintenance organization who receives, collects, disburses or invests funds in connection with the activities of that organization shall be responsible for those funds in a fiduciary relationship to the organization. Anthem represents that Anthem BCBS will comply with this requirement. 2-A H. The health maintenance organization shall maintain in force a fidelity bond or fidelity insurance on those employees and officers of the health maintenance organization who have duties as described in paragraph G, in an amount not less than $250,000 for each health maintenance organization or a maximum of $5,000,000 in aggregate maintained on behalf of health maintenance organizations owned by a common parent corporation, or such sum as may be prescribed by the superintendent. Anthem represents that Anthem BCBS will comply with this requirement. 2-A I. If any agreement, as set forth in paragraph D, subparagraph (2), division (c), is made by the health maintenance organization, the entity executing the agreement with the health maintenance organization must demonstrate to the superintendent's satisfaction that the entity has sufficient unencumbered surplus funds to cover the assured payments under the agreement, otherwise the superintendent shall disallow the agreement. In considering approval of such an agreement, the superintendent shall consider the entity's record of earnings for the most recent 3 years, the risk characteristics of its investments and whether its investments and other assets are reasonably liquid and available to make payments for health services. Anthem BCBS understands this provision to refer to agreements with other organizations to assure the financial viability of the HMO, such as reinsurance guarantees, insolvency insurance coverage, and agreements to provide replacement coverage or the like. Anthem BCBS does not anticipate having such agreements for its HMO line of business. 2-A J. A health maintenance organization that offers coverage to groups in this State shall offer to groups of all sizes health benefit plans that meet the requirements for standardized health plans specified in Bureau of Insurance Rule Chapter 750. Anthem BCBS intends to continue to offer the HMO Basic and HMO Standard, Individual and Group coverage that is currently offered by BCBSME consistent with applicable law. 2-A K. The health maintenance organization provides a spectrum of providers and services that meet patient demand. Anthem BCBS intends to continue the HMO operations currently carried on by BCBSME, without material modification, unless prior approval of such modification is obtained from the Bureau of Insurance, if required by law or regulation. 2-A L. The health maintenance organization meets the requirements of section 4303, subsection 1, which states: " A carrier offering a managed care plan shall provide to its members reasonable access to health care services in accordance with standards developed by rule by the superintendent before January 1, 1997. These standards must consider the geographical and transportational problems in rural areas. " Anthem BCBS intends to continue the HMO operations currently carried on by BCBSME, without material modification, unless prior approval of such modification is obtained from the Bureau of Insurance, if required by law or regulation. 2-A M. The health maintenance organization demonstrates a plan for providing services for rural and underserved populations and for developing relationships with essential community providers within the area of the proposed certificate. The health maintenance organization must make an annual report to the superintendent regarding the plan. Anthem BCBS intends to continue the HMO operations currently carried on by BCBSME, including BCBSME ’ s Access Plan, without material modification, unless prior approval of such modification is obtained from the Bureau of Insurance, if required by law or regulation. BCBSME ’ s Access Plan is submitted annually and on file at the Bureau of Insurance. 2-A N. Beginning July 1, 1995, a health maintenance organization that offers coverage to groups in the State shall offer coverage for purchase by individuals. In accordance with this requirement, Anthem BCBS intends to comply with applicable requirements to continue to offer the Individual HMO Basic and Individual HMO Standard coverage. 2-A O. Each health maintenance organization shall provide basic health care services. Anthem BCBS will assume the obligations under BCBSME ’ s Certificates of Coverage under a Bulk Reinsurance Agreement, submitted as part of the Initial Consolidated Filing at Tab 4 ( " Bulk Reinsurance Agreement " ). Anthem intends to maintain the product offerings of BCBSME, and will seek approval of new certificates and certificate amendments as required by law. 3-A. Investments. The health maintenance organization shall invest funds only in accordance with chapter 13-A. Anthem BCBS will comply with chapter 13-A, except as otherwise set forth in Section 4204(3-A). 4. Uncovered expenditures involving deposit. A health maintenance organization shall deposit with the superintendent or, at the discretion of the superintendent, with any organization or trustee acceptable to the superintendent through which a custodial or controlled account is maintained, cash or securities that are acceptable to the superintendent and that at all times are maintained in a fair market value of not less than an amount equal to the greater of $100,000 or 120% of the health maintenance organization's liability for uncovered expenditures for enrollees as of the end of the most recent calendar quarter, including but not limited to, liability for incurred but not reported claims. If the health maintenance organization's liability for uncovered expenditures increases more than 10% prior to the end of the calendar quarter, the health maintenance organization must, within 10 days of the determination, deposit an amount sufficient to ensure compliance with this section. In the case of domestic health maintenance organizations, " enrollees " for purposes of this subsection means all enrollees of the organization regardless of residence. In the case of foreign health maintenance organizations, " enrollees " for purposes of this subsection means only those enrollees who are residents of this State. Anthem BCBS will comply with this requirement. 5. Every health maintenance organization shall, when determining liabilities, include an amount estimated in the aggregate to provide for any unearned premium and for the payment of all claims for health care expenditures that have been incurred, whether reported or unreported, that are unpaid, and for which the organization is or may be liable, and to provide for the expense of adjustment or settlement of those claims. These liabilities must be computed in accordance with rules promulgated by the superintendent upon reasonable consideration of the ascertained experience and character of the health maintenance organization. Anthem BCBS will comply with this requirement. 6. Every contract between a health maintenance organization and a participating provider of health care services must be in writing and must set forth that in the event the health maintenance organization fails to pay for health care services as set forth in the contract, the subscriber or enrollee may not be liable to the provider for any sums owed by the health maintenance organization. BCBSME provider contracts meet this requirement. Anthem BCBSME will assume BCBSME provider contracts, and intends to maintain the HMO operations of BCBSME without material modification, unless prior approval of such modification is obtained from the Bureau of Insurance, if required by law or regulation. 7.The superintendent shall require that each health maintenance organization have a plan for handling insolvency that allows for continuation of benefits for the duration of the contract period for which premiums have been paid and continuation of benefits to covered persons who are confined on the date of insolvency in an inpatient facility until those covered persons are discharged or upon expiration of benefits. In considering such a plan, the superintendent may require: 7A. Insurance adequate to cover the expenses to be paid for continued benefits after an insolvency; 7B. That the provider contract obligate the provider to provide services for the duration of the period after the health maintenance organization's insolvency for which premium payment has been made and until the enrollees' discharge from inpatient facilities. 7C. That insolvency reserves be provided and maintained for that period of claims exposure of a health maintenance organization during which a provider's termination of services is pending pursuant to subsection 8. 7D. Any other arrangements to ensure that benefits are continued as specified in this section. As stated above in the response to Section 4203(3)(R), at the Closing Anthem will cause Anthem BCBS to have capitalization equal to at least 100% of the NAIC Risk Based Capital standards for Managed Care Organizations. In addition, the provider contracts of BCBSME to be assumed by Anthem BCBS contain " hold harmless " provisions to protect enrollees and covered persons. Finally, in connection with the maintenance of the right to use the Blue Cross and Blue Shield name and mark, Anthem will certify to the Blue Cross and Blue Shield Association that it guarantees to the full extent of its assets all of the contractual and financial obligations of Anthem BCBS to its customers. 8. Notice of termination. An agreement to provide health care services between a provider and a health maintenance organization must require that, if the provider terminates that agreement, the provider shall give the health maintenance organization not less than 60 days' notice in advance of termination. That agreement must not require more than 90 days' notice after an initial participation period not to exceed 6 months. If the health maintenance organization has a net loss of 5 or more primary care physicians in any county in any 30-day period, the health maintenance organization shall notify the Bureau of Insurance in writing within 10 days of acquiring knowledge of that loss. BCBSME provider contracts meet this requirement. Anthem BCBS will assume BCBSME provider contracts and will comply with this requirement. III. 24-A M.R.S.A. 4204-A: 1. Initial minimum surplus. To qualify for authority as a health maintenance organization, an organization shall have an initial minimum surplus of $1,500,000. HMO Maine is an existing HMO, and this requirement is inapplicable. 2. Surplus maintained. Except as provided in this section, every health maintenance organization must maintain a minimum surplus equal to the greater of: A. One million dollars; B. Two percent of annual premium revenues as reported in the annual financial statement covering the health maintenance organization's immediately preceding fiscal year as filed with the superintendent on the first $150,000,000 of premium and 1% of annual premium on the premium in excess of $150,000,000; C. An amount equal to the sum of 3 months uncovered health care expenditures as reported on the financial statement covering the health maintenance organization's immediately preceding fiscal year as filed with the superintendent; or D. An amount equal to the sum of:
Anthem BCBSME will comply with all applicable minimum surplus requirements. See Pro Forma Income Statements.
IV. Rule Chapter 191: 6A. Certification The certification required by 24-A M.R.S.A. § 4203(3) must include a statement that the applicant is aware of the requirements of Title 24-A Chapter 56 and this regulation, and agrees to conform to those requirements and any other prospectively applicable enacted or promulgated requirements of which it has notice or should have cause to notice. Anthem certifies that it is aware of the requirements of Title 24-A, Chapter 56 and this regulation, and agrees to conform to those requirements and any other prospectively applicable enacted or promulgated requirements of which it has notice or should have cause to notice. 6B. Form A An insurer operating in this State under a current Certification of Authority may directly or through a subsidiary or affiliate corporation or other business entity, organize and operate an HMO in this State. If such joint affiliation is effected and the HMO is controlled by, under common control with, or exerts control over such affiliate, these corporations and the HMO, if a distinct entity, shall be subject to the Insurance Holding Company Law, Chapter 356, Public Law 1975 and Bureau of Insurance Rule Chapter 180 and shall file such registration statement. Anthem proposes to operate the HMO line of business of BCBSME as a line of business of Anthem BCBS. Anthem will comply with 24-A M.R.S.A. § 222(8)(A). 6C. Power of Attorney A power of attorney must be filed by all foreign applicants consistent with the requirements of 24-A M.R.S.A. § 421. See response to Section 4203(3)(J) above. 6D. Organizational Structure and Operations Applications must include:
6E. Financial Information
6F. Quality Assurance Plan
6G. Marketing Materials
6H. Point of Service Plans Applicants seeking to offer a point-of-service plan to enrollees shall file all information necessary to demonstrate the plan ’ s consistency with the requirements of 24-A M.R.S A. Section 4207-A including:
6I. Complaint System Applicants must file a description of their complaint system which demonstrates consistency with the requirements of 24-A M.R.S.A. Section 4211.
6K. Contracts
Section 7. Financial Standards 7A. If an HMO is operated by a corporation which is chartered for divergent purposes, separate accounts shall be maintained respecting the HMO ’ s operations as distinguished from other business functions of the corporation. Anthem BCBS represents that it will continue to account for and report on HMO operations in a manner consistent with those methods and reports used by BCBSME. 7B. An HMO with net premium revenues of between $0 and $50 million shall maintain minimum surplus in an amount equal to the greater of:
Section 8. Solicitation The licensing requirements of Title 24-A Chapter 17 apply to the solicitation of HMO contracts. Anthem BCBS will comply with this requirement to the extent applicable. Section 9. Requirements for Evidence of Coverage Evidences of coverage, including group contracts, individual contracts and certificates, must be delivered or issued for delivery to enrollees or group contract holders not more than fifteen (15) days from the later of the effective date of coverage or the date on which the HMO is notified of enrollment, and must, in addition to the requirements of Title 24-A M.R.S.A. § 4207, include: BCBSME complies with these requirements. Anthem BCBS will maintain the HMO operations of BCBSME, without material modification, unless prior approval of such modification is obtained from the Bureau of Insurance, if required by law or regulation, adhering to all pertinent rules and regulations. 9A. Essential Information
9B. Eligibility Requirements Explanations of coverage must clearly outline the conditions that must be met by enrollees and their eligible dependents to obtain and maintain coverage including but not limited to:
9C. Claims Procedures
9D. Coordination of Benefits Evidences of coverage may contain a provision for coordination of benefits, provided that such provision shall not relieve an HMO of its duty to provide or arrange for a covered health care service to an enrollee solely because the enrollee is entitled to coverage under any other contract, policy or plan, including coverage provided under government programs. BCBSME Certificates of Coverage contain the required COB information. Anthem BCBS will assume the obligations of those Certificates under the Bulk Reinsurance Agreement. 9E. Term of Coverage Evidences of coverage shall describe the time and date or occurrence upon which coverage takes effect, including any applicable waiting periods. BCBSME Certificates of Coverage contain this required information. Anthem BCBS will assume the obligations of those Certificates under the Bulk Reinsurance Agreement. 9F. Cancellation or Termination The group or individual contract shall contain the conditions upon which cancellation or termination may be effected by the HMO [consistent with 24-A M.R.S.A. § 4212(2)], the group contract holder or the enrollee. BCBSME Certificates of Coverage and Group Account Agreements contain the required information about cancellation or termination. Anthem BCBS will assume the obligations of the Certificates of Coverage and Group Account Agreements under the Bulk Reinsurance Agreement. 9G. Renewal Evidences of coverage shall, consistent with the requirements of 24- M.R.S.A. § 2808-B and § 2736-C, contain the conditions for, and any restrictions upon, the enrollee ’ s right to renewal. BCBSME Certificates of Coverage contain the required information. Anthem BCBS will assume the obligations of those certificates under the Bulk Reinsurance Agreement. 9H. Reinstatement If an HMO permits reinstatement of an enrollee ’ s coverage, evidences of coverage must include any terms and conditions concerning reinstatement. BCBSME Certificates of Coverage contain the required reinstatement information. Anthem BCBS will assume the obligations of those certificates under the Bulk Reinsurance Agreement. 9I. Continuation of Coverage A group contract and evidence of coverage shall contain a provision that any enrollee who is an inpatient in a hospital or a skilled nursing facility on the date of discontinuance of the group contract shall be covered in accordance with the terms of the group contract until discharged from such hospital or skilled nursing facility. BCBSME Certificates of Coverage and Group Account Agreements contain this required information. Anthem BCBS will assume the obligations of the Certificates of Coverage and Group Account Agreements under the Bulk Reinsurance Agreement. 9J. Extension of Benefits for Total Disability
BCBSME Certificates of Coverage contain all of the required information on total disability. Anthem BCBS will assume the obligations of those Certificates under the Bulk Reinsurance Agreement. 9K. Grace Period
If the premium is not paid during the grace period, coverage is automatically terminated at the end of the grace period. Following the effective date of such termination, the HMO shall send the contract holder written notice advising that coverage has been terminated. BCBSME Certificates of Coverage and Group Account Agreements provide the required grace period language. Anthem BCBS will assume the obligations of the Certificates of Coverage and Group Account Agreements under the Bulk Reinsurance Agreement. 9L. Conformity with State Law Evidences of coverage delivered or issued for delivery in this State shall include a provision stating that any provision not in conformity with Chapter 56 of Title 24-A, this regulation or any other applicable law or regulation in this State shall not be rendered invalid but shall be construed and applied as if it were in full compliance with the applicable laws and regulations of this State. BCBSME Certificates of Coverage contain this provision. Anthem BCBS will assume the obligations of those Certificates under the Bulk Reinsurance Agreement. 9M. right To Examine Contract An individual contract shall contain a provision stating that the enrollee may return the contract within ten (10) days of receiving it and receive a refund of the premium paid if the person is not satisfied with the contract for any reason. If the contract is returned to the HMO or to the agent through whom it was purchased, it is considered void from the effective date. However, if services are rendered or claims are paid for such person by the HMO during the ten-day examination period and the person returns the contract to receive a refund of the premium paid, the person shall be required to pay for such services. Contracts may impose reasonable requirements on enrollees for establishing the 10 day time frame for returning a purchased contract. This provision does not apply to individuals covered under a group contract issued to an employee group as defined by 24-A M.R.S.A. § 2804 or a labor union group as defined in § 2805.BCBSME Certificates of Coverage contain all of this essential information. Anthem BCBS will assume the obligations of those Certificates under the Bulk Reinsurance Agreement. Section 10. Access to Records
Section 11. Subcontracting
To the extent there are requirements not specifically identified above, Anthem BCBS will comply. It is assuming a fully mature BCBSME health maintenance organization business that BCBSME believes is, and has represented as, in compliance with the applicable laws and regulations in all material respects. Subject to the Introductory Statement, Anthem BCBS will maintain BCBSME ’ s HMO operation without material modification, unless prior approval of such modification is obtained, if required by law or regulation. SIGNATURE Pursuant to the requirements of 24-A M.R.S.A. § § 4203(3), Anthem Insurance Companies, Inc., has caused this application to be duly signed on its behalf in the City of Indianapolis and State of Indiana on the 1st day of February, 2000. ANTHEM INSURANCE COMPANIES, INC.
[SEAL] By: Name: David R. Frick Title: Exec. Vice President and Chief Legal and Administrative Officer
Attest:
Signature of Officer
Title
CERTIFICATION
The undersigned deposes and says that he has duly executed the attached application dated February 1, 2000, for and on behalf of Anthem Insurance Companies, Inc.; that he is the Executive Vice President and Chief Legal and Administrative Officer of such company and that he is authorized to execute and file such instrument. Deponent further says that he is familiar with the instrument and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.
Name: David R. Frick
CERTIFICATE OF SERVICE The undersigned hereby certifies that on February 1, 2000 a copy of the non-confidential version of Anthem Health Plans of Maine Inc. ’ s Application for Certificate of Authority to Operate a Health Maintenance Organization was served by United States mail, first class postage prepaid, or, where indicated, by hand delivery, on each of the persons listed below. Robert S. Frank, Esq. Harvey & Frank Two City Center P.O. Box 126 Portland, Maine 04112 e-mail: frank@harveyfrank.com (Blue Cross/Blue Shield of Maine)
Judith Chamberlain, Esq. State of Maine Department of the Attorney General 6 State House Station Augusta, Maine 04333-0006 e-mail: judy.chamberlain@state.me.us (Bureau of Insurance)
William H. Laubenstein, Esq. State of Maine Department of the Attorney General 6 State House Station Augusta, Maine 04333-0006 e-mail: bill.laubenstein@state.me.us (Office of the Attorney General)
Gregory A. Brodek, Esq. Duane, Morris & Heckscher, LLP 15 Columbia Street, 4th Floor Bangor, Maine 04401-6355 e-mail: gabrodek@duanemorris.com (Maine Health Alliance)
Joseph P. Ditre, Esq. Consumer Health Law Program One Weston Court, Level One P.O. Box 2490 Augusta, Maine 04338-2490 e-mail: jditre@mainecahc.org (Consumers for Affordable Health Care Foundation/Coalition)
Michele M. Garvin, Esq. Ropes & Gray One International Place Boston, Massachusetts 02110-2624 e-mail: Mgarvin@Ropesgray.com (Central Maine Healthcare Corporation; Central Maine Partners Health Plan)
Robert I. Goldman Maine Council of Senior Citizens 27 Bowery Beach Road Cape Elizabeth, Maine 04107 e-mail: Rgoldma1@maine.rr.com (Maine Council of Senior Citizens)
Bonnie Post Executive Director of the Maine Ambulatory Care Coalition P.O. Box 390 Manchester, Maine 04351 e-mail: bdpmacc@mint.net (Sacopee Valley Health Center, Regional Medical Center at Lubec, Eastport Health Care, Inc., and the Maine Ambulatory Care Coalition)
John Dieffenbacher-Krall Executive Director Maine People ’ s Alliance 192 State Street Portland, Maine 04101 e-mail: MPA@gwi.net (Maine People ’ s Alliance)
Gordon H. Smith, Esq. Maine Medical Association 30 Association Drive P.O. Box 190 Manchester, Maine 04351 e-mail: gsmith@ctel.net (Thomas D. Hayward, M.D., Maroulla S. Gleaton, M.D., And the Maine Medical Association)
Donald E. Quigley, Esq. General Counsel 465 Congress Street, Suite 600 Portland, Maine 04101-3537 e-mail: quigld@mail.mmc.org (Maine Medical Center)
Sandra L. Parker, Esq. Attorney for MHA, Inc. 150 Capitol Street Augusta, Maine 04330 e-mail: sparker@themha.org (MHA, Inc.)
Kellie P. Miller, M.S. Executive Director Maine Osteopathic Association 693 Western Avenue Manchester, Maine 04351 e-mail: meosteo@mint.net (Maine Osteopathic Association)
Edward Miller Executive Director American Lung Association of Maine 122 State Street Augusta, Maine 04330 e-mail: emiller@mainelung.org (American Lung Association of Maine)
DATED: February 1, 2000 _____________________________ James B. Zimpritch, Esq. Jeffrey M. White, Esq. Catherine R. Connors, Esq. PIERCE ATWOOD One Monument Square Portland, Maine 04101 (207) 791-1100 Attorneys for Anthem Insurance Companies, Inc.
Last Updated: October 1, 2008 |
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