§300e–17 — Title 42 The Public Health and Welfare | U.S. Code

Summary

Health maintenance organizations must send financial reports to the Secretary under the Secretary’s rules. The reports must prove the HMO is financially sound, include any report it files with the Centers for Medicare & Medicaid Services that those agencies require under sections 1320a–3 and 1396a(a)(38), and describe certain deals with related parties such as sales, leases, payments for goods or management services (not regular employee pay or normal patient care), and loans or other credit. A "party in interest" means people or groups closely tied to the HMO: managers or officers, anyone owning more than 5% of the HMO or a loan secured by more than 5%, entities where those people are officers or own more than 5%, companies that control or are controlled by the HMO, and close family (spouse, child, parent). HMOs must let enrollees see the reported information if they ask. The Secretary will review reported transactions to check for harm to the HMO’s finances or unreasonable charges and must review at least five HMOs or at least one‑fourth of reporters if more than twenty report. The Secretary may not approve HMO rates. An HMO that fails to file the required annual financial statement loses federal assistance under this subchapter and cannot be a qualified HMO under section 300e–9 until it files. Knowingly making a false material statement in these filings is a felony, punishable by up to $25,000 fine or up to five years in prison, or both.

Title 42, §300e–17

The Public Health and Welfare — Source: USLM XML via OLRC

(a)Each health maintenance organization shall, in accordance with regulations of the Secretary, report to the Secretary financial information which shall include the following:

(1)Such information as the Secretary may require demonstrating that the health maintenance organization has a fiscally sound operation.

(2)A copy of the report, if any, filed with the Centers for Medicare & Medicaid Services containing the information required to be reported under section 1320a–3 of this title by disclosing entities and the information required to be supplied under section 1396a(a)(38) of this title.

(3)A description of transactions, as specified by the Secretary, between the health maintenance organization and a party in interest. Such transactions shall include—

(A)any sale or exchange, or leasing of any property between the health maintenance organization and a party in interest;

(B)any furnishing for consideration of goods, services (including management services), or facilities between the health maintenance organization and a party in interest, but not including salaries paid to employees for services provided in the normal course of their employment and health services provided to members by hospitals and other providers and by staff, medical group (or groups), individual practice association (or associations), or any combination thereof; and

(C)any lending of money or other extension of credit between a health maintenance organization and a party in interest.

(b)For the purposes of this section the term “party in interest” means:

(1)any director, officer, partner, or employee responsible for management or administration of a health maintenance organization, any person who is directly or indirectly the beneficial owner of more than 5 per centum of the equity of the organization, any person who is the beneficial owner of a mortgage, deed of trust, note, or other interest secured by, and valuing more than 5 per centum of the health maintenance organization, and, in the case of a health maintenance organization organized as a nonprofit corporation, an incorporator or member of such corporation under applicable State corporation law;

(2)any entity in which a person described in paragraph (1)—

(A)is an officer or director;

(B)is a partner (if such entity is organized as a partnership);

(C)has directly or indirectly a beneficial interest of more than 5 per centum of the equity; or

(D)has a mortgage, deed of trust, note, on other interest valuing more than 5 per centum of the assets of such entity;

(3)any person directly or indirectly controlling, controlled by, or under common control with a health maintenance organization; and

(4)any spouse, child, or parent of an individual described in paragraph (1).

(c)Each health maintenance organization shall make the information reported pursuant to subsection (a) available to its enrollees upon reasonable request.

(d)The Secretary shall, as he deems necessary, conduct an evaluation of transactions reported to the Secretary under subsection (a)(3) for the purpose of determining their adverse impact, if any, on the fiscal soundness and reasonableness of charges to the health maintenance organization with respect to which they transpired. The Secretary shall evaluate the reported transactions of not less than five, or if there are more than twenty health maintenance organizations reporting such transactions, not less than one-fourth of the health maintenance organizations reporting any such transactions under subsection (a)(3).

(e)

(f)Nothing in this section shall be construed to confer upon the Secretary any authority to approve or disapprove the rates charged by any health maintenance organization.

(g)Any health maintenance organization failing to file with the Secretary the annual financial statement required in subsection (a) shall be ineligible for any Federal assistance under this subchapter until such time as such statement is received by the Secretary and shall not be a qualified health maintenance organization for purposes of section 300e–9 of this title.

(h)Whoever knowingly and willfully makes or causes to be made any false statement or representation of a material fact in any statement filed pursuant to this section shall be guilty of a felony and upon conviction thereof shall be fined not more than $25,000 or imprisoned for not more than five years, or both.

Notes & Related Subsidiaries

Editorial Notes

Amendments

2003—Subsec. (a)(2). Pub. L. 108–173 substituted “Centers for Medicare & Medicaid Services” for “Health Care Financing Administration”. 1986—Subsec. (e). Pub. L. 99–660 struck out subsec. (e) which read as follows: “The Secretary shall file an annual report with the Congress on the operation of this section. Such report shall include— “(1) an enumeration of standards and norms utilized to make the evaluations required under subsection (d) of this section; “(2) an assessment of the degree of conformity or nonconformity of each health maintenance organization evaluated by the Secretary under subsection (d) of this section with such standards and norms; “(3) what action, if any, the Secretary considers necessary under section 300e–11 of this title with respect to health maintenance organizations evaluated under subsection (d) of this section.” 1981—Subsec. (a). Pub. L. 97–35, § 948(a), (b), in par. (2) inserted reference to copy of the report, if any, filed with the Health Care Financing Administration, and in par. (3)(B) reorganized excluding provisions and, among revisions, inserted salaries paid to employees for services. Subsec. (b)(1). Pub. L. 97–35, § 948(c), inserted “responsible for management or administration” after “employee”. Subsec. (b)(4). Pub. L. 97–35, § 948(d), substituted “spouse, child, or parent” for “member of the immediate family”.

Statutory Notes and Related Subsidiaries

Effective Date

of 1986 AmendmentAmendment by Pub. L. 99–660 effective Oct. 1, 1985, see section 815(a) of Pub. L. 99–660, set out as an Effective and Termination Dates of 1986 Amendment note under section 300e–1 of this title.

§300e–17 Financial disclosure