(A) The director or his designee shall issue a certificate of authority to a person filing an application pursuant to Section 38-33-30 if, upon payment of the application fee prescribed in Section 38-33-220, the director or his designee is satisfied that:

(1) The persons responsible for the conduct of the affairs of the applicant are competent, trustworthy, and possess good reputations.

(2) The health maintenance organization's proposed plan of operation has arrangements for an on-going quality assurance program.

(3) The health maintenance organization effectively provides or arranges for the provision of basic health care services for a fixed prepaid premium, except to the extent of reasonable requirements for deductibles or co-payments.

(4) The health maintenance organization is financially responsible, is able to meet its obligations to enrollees and prospective enrollees, and otherwise meets the requirements of this chapter. In making this determination, considerations by the director or his designee may include, but are not limited to:

(a) the financial soundness of the arrangements for health care services and the schedule of charges used in connection with them;

(b) the adequacy of working capital;

(c) an agreement with an insurer, a government, or other organization for insuring the payment of the cost of health care services or the provision for automatic applicability of an alternative coverage if the health maintenance organization is discontinued;

(d) an agreement with providers for the provision of health care services;

(e) a deposit of cash or securities submitted in accordance with Section 38-33-130.

(5) The enrollees are afforded an opportunity to participate in matters of policy and operation pursuant to Section 38-33-60.

(6) Nothing in the proposed method of operation, pursuant to Section 38-33-30 or by independent investigation, is contrary to the public interest.

(B) No health maintenance organization may be licensed unless it has employed or contracted with or made arrangements satisfactory to the director or his designee with both physicians and hospitals to participate as providers in each geographic area to be served, as identified by the health maintenance organization under Section 38-33-30.

HISTORY: Former 1976 Code Section 38-33-40 [1962 Code Section 37-334; 1968 (55) 2407; 1978 Act No. 441 Section 4] recodified as Section 38-67-40 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-25-40 [1962 Code Section 37-1134; 1974 (58) 2378] recodified as Section 38-33-40 by 1987 Act No. 155, Section 1; 1987 Act No. 83, Section 1 (amendment to former 1976 Code Section 38-25-40 transferred to Section 38-33-40 by 1987 Act No. 155, Section 24]; 1992 Act No. 403, Section 2; 1993 Act No. 181, Section 633.