(1) An individual or group nonprofit hospital or medical service contract issued pursuant to the provisions of this article shall not prohibit a subscriber under the contract from assigning, in writing, benefits payable under the contract to a licensed hospital or other licensed health care provider for services provided to the subscriber which are covered under the contract.

(2) When a licensed hospital or other licensed health care provider receives an assignment from a subscriber it is the responsibility of the provider to bill the contract issuer, including a copy of the assignment, and to mail a copy of such bill to the subscriber or certificate holder, stating on such copy that it is for informational purposes only and that the payor has been billed for covered benefits. The issuer of such nonprofit hospital or medical service contract shall honor such assignment and make payment of covered benefits directly to such licensed hospital or other licensed health care provider. In the event the issuer fails to honor such assignment by making payment to the subscriber and the subscriber, upon receipt of such payment, fails to timely pay an amount equivalent to such payment to the licensed hospital or other licensed health care provider, then the issuer shall be liable for such covered benefits payment directly to the licensed hospital or other licensed health care provider. It shall be the responsibility of the licensed hospital or other licensed health care provider to notify the issuer if timely payment has not been received. In such case, the issuer shall make payment of covered benefits pursuant to section 10-3-1110 (2) within thirty days after receipt of such notification.

(3) (a) Nothing in this section shall be construed to limit any nonprofit hospital, medical-surgical, and health care service corporation from determining the scope of its benefits or services or any other terms of its subscriber contracts, nor from negotiating contracts with licensed providers on reimbursement rates or any other lawful provisions.

(b) Notwithstanding the provisions of subsection (2) of this section, a licensed provider shall not be entitled to payment greater than the lesser of its charges or any level of reimbursement previously negotiated with any nonprofit hospital, medical-surgical, and health care service corporation, if applicable; nor shall such payor have any obligation under this section except for covered benefits.

(4) Nothing in this section shall be construed to prevent any nonprofit hospital, medical-surgical, and health care service corporation from limiting covered benefits to services provided by providers who have contracted with such corporation or from providing different levels of benefits depending on whether the provider has or has not contracted with such corporation.