26:2J-4. Issuance of certificate of authority

a. (1) Upon receipt of an application for issuance of a certificate of authority the commissioner shall forthwith transmit copies of such application and accompanying documents to the Commissioner of Insurance. The approval of the Commissioner of Insurance shall be required to the extent that the proposal involves the doing of an insurance business or a contract with an insurer or hospital or medical service corporation.

(2) The commissioner shall determine whether the applicant for a certificate of authority:

(a) has demonstrated the potential ability to assure that such health care services will be provided in a manner to assure both availability and accessibility of adequate personnel and facilities and in a manner enhancing availability, accessibility and continuity of service;

(b) has arrangements for an on-going quality of health care assurance program; and

(c) has a procedure to establish and maintain a uniform system of cost accounting approved by the commissioner; establish and maintain a uniform system of reports and audits meeting the requirements of the commissioner; and prepare and review annually a long range plan for the provision of health care services, which plan shall be compatible with the State Health Plan established pursuant to the "Comprehensive Health Planning and Public Health Services Amendments of 1966" (Federal Law 89-749) as related to medical health services, health care services and health manpower.

(3) Where the application has been rejected the commissioner shall specify in what respect it fails to comply and, if applicable, specifies in what respect the proposal fails to comply with the requirements of the Commissioner of Insurance.

b. Issuance of a certificate of authority shall be granted upon payment of the application fee prescribed in section 23 hereof if the commissioner and, if applicable, the Commissioner of Insurance, are satisfied that the following conditions are met:

(1) the health maintenance organization's proposed plan of operation meets the requirements of subsection a. (2) of this section;

(2) the applicant's proposal sets forth an appropriate mechanism whereby the health maintenance organization will effectively provide or arrange for the provision of health care services on a prepaid basis;

(3) the health maintenance organization is financially sound and may reasonably be expected to meet its obligations to enrollees and prospective enrollees. In making this determination, the commissioner may consider:

(a) the adequacy of working capital and funding sources;

(b) agreements if any, with an insurer, a hospital or medical service corporation, a government, or any other organization for insuring the payment of the cost of health care services or the provision for automatic applicability of an alternative coverage in the event of discontinuance of the plan;

(c) any agreement with providers for the provision of health care services;

(d) any deposit of cash or form of guaranty or security submitted in accordance with section 14 hereof to assure that the obligations will be duly performed; and

(e) The financial soundness of the health maintenance organization's arrangements for health care services and the schedule of charges used in connection therewith;

(4) the enrollees will be afforded an opportunity to participate in matters of policy and operation pursuant to section 6 hereof;

(5) nothing in the proposed method of operation, as shown by the information submitted pursuant to section 3 hereof or by independent investigation, is contrary to the public interest; and

(6) any deficiencies found by the commissioner or the Commissioner of Insurance have been corrected.

c. A certificate of authority shall be denied only after compliance with the requirements of section 22 hereof.

L.1973, c. 337, s. 4, eff. Dec. 27, 1973.