* § 4408-a. Integrated delivery systems. 1. Legislative purpose and
findings. The legislature intends to facilitate the ability of
integrated delivery systems to assume a larger role in delivering a full
array of health care services, from primary and preventive care through
acute inpatient hospital and post-hospital care to a defined population
for a determined price. The legislature finds that the formation and
operation of integrated delivery systems under this section will promote
the purposes of federal and state anti-referral statutes which are to
reduce over-utilization and expenditures and finds that such statutes
should not be interpreted to interfere with the development of such
integrated delivery systems or impose liability for arrangements between
an integrated delivery system certified pursuant to this section and its
participating providers and entities. The legislature further finds that
the development of integrated delivery systems will reduce costs and
enhance quality. It intends that systems acting pursuant to a
certificate of authority issued under this section shall not be subject
to state or federal antitrust liability for doing so.

2. Definitions. For the purposes of this section:

(a) "Applicant" means a separate legal entity created for the purpose
of establishing and operating an integrated delivery system. Such entity
shall be composed of or controlled by one or more affiliated providers
or one or more affiliated groups of providers.

(b) "Provider" means an entity licensed or certified under article
twenty-eight or thirty-six of this chapter; an entity licensed or
certified under article sixteen, twenty-three, thirty-one or thirty-two
of the mental hygiene law; or a health care practitioner, or combination
of health care practitioners, licensed under title eight of the
education law. Every provider shall be: (i) a natural person; (ii) a
partnership all of whose members are natural persons and that is not a
limited partnership; or (iii) a corporation none of whose stock is owned
by another corporation.

3. The commissioner, after receiving from the superintendent of
financial services the evaluations and approvals required pursuant to
subdivision seven of this section, may issue a certificate of authority
to an applicant which satisfies the conditions under this section for
issuance established by the commissioner and which seeks to deliver
comprehensive health services, on a capitated basis, including inpatient
services, to:

(a) persons who are receiving benefits under title XVIII of the
federal social security act; or

(b) persons who are receiving benefits under title XIX of the federal
social security act and commercial enrollees; or

(c) an enrollee population which includes persons receiving benefits
under titles XVIII and XIX of the federal social security act and
commercial enrollees.

4. An applicant must demonstrate to the commissioner that it will
provide at least seventy-five percent of the total expenditures for
covered health care items and services directly to its enrollees through
the provider, affiliated providers or affiliated groups of providers
comprising such applicant. The applicant shall make arrangements or
referrals for any covered health care items and services not provided
directly to its enrollees by such applicant.

5. A provider shall be deemed affiliated with another provider or
group of providers if, through contract, ownership or otherwise:

(a) one provider, directly or indirectly, owns, controls, or holds the
power to vote, or proxies for, not less than fifty-one percent of the
voting rights or governance rights of another;

(b) each provider is a participant in a lawful combination under which
each provider shares, either directly or indirectly, substantial
financial risk in connection with the activities and services of such
combination; or

(c) a provider is a corporate member of a provider organized as a
not-for-profit corporation duly designated pursuant to section six
hundred one of the not-for-profit corporation law.

6. The commissioner shall be responsible for evaluating, approving and
regulating all matters relating to delivery systems, quality of care and
access to care to be provided through the integrated delivery system. In
performing this responsibility, the commissioner shall assure:

(a) that the formation and operation of the integrated delivery system
will enhance access to health services in the area to be served; and

(b) subject to subdivision four of this section, the comprehensive
health services will be provided by the applicant through its proposed
delivery system (including through providers other than those composing,
affiliated with or controlling the applicant).

7. (a) The superintendent of financial services, in consultation with
the commissioner in accordance with a protocol to be specified in a
memorandum of understanding between the commissioner and the
superintendent of financial services regarding fiscal solvency, shall be
responsible for evaluating, approving and regulating all matters
relating to premium rates, subscriber contracts and fiscal solvency,
including reserves, surplus and provider contracts to the extent such
contracts relate to fiscal solvency matters. The superintendent of
financial services, in the administration of this subdivision, shall:

(i) be guided by the standards which govern the fiscal solvency of a
health maintenance organization, provided, however, that the
superintendent of financial services shall recognize and consider the
specific delivery components, operational capacity and financial
capability of the applicant for a certificate of authority; and

(ii) not apply financial solvency standards that exceed those required
for a health maintenance organization.

(b) Standards established pursuant to this subdivision shall be
adequate to protect the interests of the subscribers to integrated
delivery systems. The superintendent of financial services must be
satisfied that the applicant is fiscally sound, and has made adequate
provisions to pay for services:

(i) that are furnished by providers that are not affiliated with the
applicant;

(ii) to meet the specialized health care needs of certain enrollees
needing care at specialty care centers; and

(iii) for which claims are submitted after the period for which the
applicant will receive payments.

8. The integrated delivery system shall have its premiums determined
on a community-rated basis in accordance with the insurance law except
where the enrollees are eligible to receive services under title XIX of
the federal social security act in which case the premium rates shall be
established by the commissioner, in consultation with the superintendent
of financial services, subject to the approval of the director of the
division of the budget.

9. An integrated delivery system shall be subject to the provisions of
the insurance law that are applicable to health maintenance
organizations, this chapter and regulations applicable to health
maintenance organization, and any regulations promulgated by the
commissioner or superintendent of financial services to implement this
section. To the extent that the provisions of this section are
inconsistent with the provisions of this chapter or the provisions of
the insurance law, the provisions of this section shall prevail.

10. No certificate of authority for an integrated delivery system
shall be issued pursuant to this section on or after April first, two
thousand two and integrated delivery systems issued certificates before
such date shall accept no new enrollees thereafter.

* NB There are 2 § 4408-a's