Colorado Legislative Council Staff

NO FISCAL IMPACT

TITLE:            CONCERNING THE CHANGES TO THE OPERATING REQUIREMENTS OF HEALTH MAINTENANCE ORGANIZATIONS, AND, IN CONNECTION THEREWITH, CHANGING INDEMNITY BENEFITS, SOLVENCY REQUIREMENTS, AND REPORTING REQUIREMENTS OF HEALTH MAINTENANCE ORGANIZATIONS.

Summary of Assessment

            This bill makes changes to the operating requirements of HMOs (health maintenance organizations) regulated by the Commissioner of Insurance, Division of Insurance, Department of Regulatory Agencies. The changes include:

            •   allowing HMOs to offer indemnity benefits that do not exceed 20 percent of the HMO's net medical and hospital expenses incurred on an annual basis;

            •   increasing the minimum amount of surplus an HMO must have from $1,200,000 to $1,500,000 before the commissioner issues a certificate of authority;

            •   allowing the commissioner to reduce the initial minimum surplus up to $500,000 if the HMO establishes that it has sufficient administrative infrastructure;

            •   authorizing the commissioner to promulgate rules, to establish standards consistent with the risk-based capital models applicable to HMOs developed or adopted by the National Association of Insurance Commissioners, requiring HMOs to maintain a greater minimum level of surplus than the specified dollar minimums; and

            •   amending some of HMOs' required reports to the commissioner.

            The bill would become effective July 1, 1999.

            The provisions of this bill are not expected to have any fiscal impact on the workload of the Commissioner of Insurance, Division of Insurance. The division has indicated that the bill will not result in additional hearings or appeals and that the cost to amend existing regulations for risk-based capital models is minimal and can be absorbed within their existing appropriation. The bill will not impact any other state agency or unit of local government. Therefore, this bill is assessed as having no fiscal impact.

Departments Contacted

            Regulatory Agencies