Michigan Laws 500.3569 – Assumption of financial risk
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Terms Used In Michigan Laws 500.3569
- Affiliated provider: means a health professional, licensed hospital, licensed pharmacy, or any other institution, organization, or person that has entered into a participating provider contract, directly or indirectly, with a health maintenance organization to render 1 or more health services to an enrollee. See Michigan Laws 500.3501
- Contract: A legal written agreement that becomes binding when signed.
- Enrollee: means an individual who is entitled to receive health services under a health insurance contract, unless the context requires otherwise. See Michigan Laws 500.116
- Health maintenance organization: means a person that, among other things, does the following:
(i) Delivers health services that are medically necessary to enrollees under the terms of its health maintenance contract, directly or through contracts with affiliated providers, in exchange for a fixed prepaid sum or per capita prepayment, without regard to the frequency, extent, or kind of health services. See Michigan Laws 500.3501Health services: means services provided to enrollees of a health maintenance organization under their health maintenance contract. See Michigan Laws 500.3501
(1) Except as provided in section 3515(2), a health maintenance organization shall assume full financial risk on a prospective basis for the provision of health services under a health maintenance organization contract. A health maintenance organization may do any of the following:
(a) Require an affiliated provider to assume financial risk under the terms of its contract.
(b) Obtain insurance.
(c) Make other arrangements for the cost of providing to an enrollee health services the aggregate value of which is more than $5,000.00 in a year for that enrollee.
(2) If the health maintenance organization requires an affiliated provider to assume financial risk under the terms of its contract, the contract must require both of the following:
(a) The health maintenance organization to pay the affiliated provider, including a subcontracted provider, directly or through a licensed third party administrator for health services provided to its enrollees.
(b) The health maintenance organization to keep all pooled funds and withhold amounts and account for them on its financial books and records and reconcile them at year end pursuant to the contract.
(3) For purposes of this section, a health maintenance organization requires an affiliated provider to assume financial risk if it shares with the affiliated provider, in return for consideration, a portion of the chance of loss, including expenses incurred, related to the delivery of health services to enrollees. The type of transactions under which a health maintenance organization may require an affiliated provider to assume financial risk under this section include, but are not limited to, full or partial capitation agreements, withholds, risk corridors, and indemnity agreements.