§ 2807-f. Health maintenance organization payment factor. 1. For
purposes of this section, the following terms shall have the following
meaning:

(a) "HMO" shall mean a health maintenance organization operating in
accordance with the provisions of article forty-four of this chapter or
article forty-three of the insurance law.

(b) "Medicaid" shall mean the medical assistance program established
pursuant to title eleven of article five of the social services law.

2. For periods commencing on or after July first, nineteen hundred
ninety-eight, an HMO payment factor shall be determined in accordance
with subdivision three of this section. Such subdivision shall apply
during the period July first, nineteen hundred ninety-eight through June
thirtieth, nineteen hundred ninety-nine; provided, however, that this
section shall expire and be deemed repealed on and after the date on
which New York state is granted the authority, by federal waiver, agreed
upon by the state and the secretary of the federal department of health
and human services, or federal statute, to operate a mandatory medicaid
managed care program.

3. (a) In recognition of the public benefits resulting from enrolling
medicaid enrollees into managed care plans, HMOs are required to make a
good faith effort to enroll medicaid recipients. A good faith effort
shall be defined as:

(i) submitting a reasonable bid in response to a state or county
procurement process;

(ii) willingness to enter into reasonable managed care contracts with
counties in its approved service area;

(iii) demonstrating a willingness to enroll medicaid recipients
including accepting referrals from counties, brokers and
auto-assignments; and

(iv) such other factors as may be established by the commissioner.

(b) In the event that an HMO has not made a good faith effort to
enroll medicaid recipients, the commissioner shall impose a payment
factor of nine percent on payments to general hospitals for the calendar
year by such HMO. The commissioner shall notify HMOs of any failure to
make a good faith effort and the application of the payment factor by
November first preceding the applicable calendar year.

4. (a) Each HMO on behalf of general hospitals shall pay into a
statewide health maintenance organization pool created by the
commissioner the factor established pursuant to subdivision two or three
and this subdivision for each patient discharged in the previous
calendar month commencing with July first, nineteen hundred ninety-six
through December thirty-first, nineteen hundred ninety-nine or
contracted hospital inpatient service obligations for periods on or
after July first, nineteen hundred ninety-six through December
thirty-first, nineteen hundred ninety-nine. Funds accumulated in the
pool, including income from invested funds, shall be deposited by the
commissioner and credited to the general fund.

(b) Payments by HMOs to the pool shall be due on or before the
fifteenth day following the end of each month.

(c) (i) If a payment made for a month to which a payment factor
applies is less than ninety percent of the actual amount due for such
month, interest shall be due and payable to the commissioner by a health
maintenance organization on the difference between the amount paid and
the amount due from the day of the month the payment was due until the
date of payment. The rate of interest shall be twelve percent per annum
or, if greater, at the rate of interest set by the commissioner of
taxation and finance with respect to underpayments of tax pursuant to
subsection (e) of section one thousand ninety-six of the tax law minus
four percentage points. Interest under this paragraph shall not be paid
if the amount thereof is less than one dollar.

(ii) If a payment made for a month to which a payment factor applies
is less than seventy percent of the actual amount due for such month, a
penalty shall be due and payable to the commissioner by a health
maintenance organization of five percent of the difference between the
amount paid and the amount due for such month when the failure to pay is
for a duration of not more than one month after the due date of the
payment with an additional five percent for each additional month or
fraction thereof during which such failure continues, not exceeding
twenty-five percent in the aggregate.

(iii) Overpayment by a health maintenance organization of a payment
shall be applied to any other payment due pursuant to this section, or,
if no payment is due, at the election of the health maintenance
organization shall be applied to future payments or refunded to the
health maintenance organization. Interest shall be paid on overpayments
from the date of overpayment to the date of crediting or refund at the
rate determined in accordance with paragraph (a) of this subdivision
only if the overpayment was made at the direction of the commissioner.
Interest under this paragraph shall not be paid if the amount thereof is
less than one dollar.

(d) The commissioner is authorized to contract with a pool
administrator designated for purposes of administering pools pursuant to
subdivision two-a of section twenty-eight hundred seven-c of this
article as in effect on June thirtieth, nineteen hundred ninety-six, or
if not available such other administrators as the commissioner shall
designate, to receive and distribute health maintenance organization
pool funds. In the event contracts are effectuated, the commissioner
shall conduct or cause to be conducted annual audits of the receipt and
distribution of the pool funds. The reasonable costs and expenses of an
administrator as approved by the commissioner, not to exceed for
personnel services on an annual basis two hundred thousand dollars,
shall be paid from the pooled funds.

5. Payment factors established pursuant to this section shall not
apply to payments for subscribers who are eligible for medical
assistance pursuant to the social services law, participants in regional
pilot projects established pursuant to chapter seven hundred three of
the laws of nineteen hundred eighty-eight or successor insurance
programs, and enrollees in the child health insurance program pursuant
to sections twenty-five hundred ten and twenty-five hundred eleven of
this title.

6. Notwithstanding any inconsistent provisions of the state
administrative procedure act or any other provision of law, the
commissioner is authorized to adopt or amend on an emergency basis any
regulation he or she determines necessary to implement this section.

7. HMOs shall provide to the commissioner such information as the
commissioner may require to effectuate the provisions of this section.