It is enacted by the General Assembly as follows

SECTION 1. Section 27-41-3 of the General Laws in Chapter 27-41 entitled "Health Maintenance Organizations" is hereby amended to read as follows:

27-41-3. Establishment of health maintenance organizations. -- (a)(1) Notwithstanding chapter 5.1 of title 7, sections 27-2-22, 27-19-4, 27-20-4, 27-20.1-2, 27-20.2-2, or any other law of this state to the contrary, any public or private organization may apply to the director of business regulation for and obtain a license to establish and operate a health maintenance organization in compliance with this chapter. No public or private organization shall establish or operate a health maintenance organization in this state, without obtaining a license under this chapter. A foreign corporation may qualify under this chapter, subject to its registration to do business in this state as a foreign corporation under section 7-1.1-99;

(2) Notwithstanding anything to the contrary in section 7-6-4, a non-profit corporation may be organized for the purpose of a health maintenance organization and that corporation shall not be subject to limits in its assets except as provided herein.

(b) Each application for a license shall be verified by an officer or authorized representative of the applicant, shall be in a form prescribed by the director in consultation with the director of health, and shall set forth or be accompanied by the following:

(1) A copy of the organizational documents of the applicant, such as the articles of incorporation;

(2) A copy of the by-laws, rules and regulations, or similar document, if any, regulating the conduct of the internal affairs of the applicant;

(3) A list of the names, addresses, and official positions of the persons who are to be responsible for the conduct of the affairs of the applicant, including all members of the board of directors, board of trustees, executive committee, or other governing board or committee, the principal officers of the corporation;

(4) A copy of any contract made or to be made, including any revisions to such document between any providers or persons listed in subsection (b)(3) and the applicant;

(5) A copy of the form of evidence of coverage to be issued to the enrollees;

(6) A copy of the form of the group contract, if any, which is to be issued to employers, unions, trustees, or other organizations;

(7) Financial statements showing the applicant's assets, liabilities, and sources of financial support. If the applicant's financial affairs are audited by independent certified public accountants, a copy of the applicant's most recent regular certified financial statement shall be deemed to satisfy this requirement unless the director directs that additional or more recent financial information is required for the proper administration of this chapter;

{ADD 7.1) An examination report prepared by the insurance department of the company's state of domicile or port of entry state. This requirement shall be deemed to be satisfied if the report is less than five (5) years old and (1) the insurance department at the time of the examination was accredited under the National Association of Insurance Commissioners' financial regulations standards and accreditation program or (2) the examination is performed under the supervision of an accredited insurance department or with the participation of one (1) or more examiners who are employed by such an accredited state insurance department and who, after a review of the examination workpapers and report, state under oath that the examination was performed in a manner consistent with the standards and procedures required by their insurance department. In lieu of an examination meeting the requirements set forth herein, an examination of the company may be performed, prior to licensure, by the Rhode Island Insurance Division. Said examination shall be performed and the associated costs shall be borne by the company in accordance with all the provisions of Rhode Island General Laws chapter 27-13.1. ADD}

(8) A description of the proposed method of marketing the health maintenance organization, a financial plan which includes a projection of the initial operating results anticipated until the organization has had net income for at least one year, and a statement as to the sources of working capital as well as any other sources of funding;

(9) A power of attorney duly executed by the applicant, if not domiciled in this state, appointing the director and his or her successors in office, and duly authorized deputies, as the true and lawful attorney of the applicant in and for this state upon whom all lawful process in any legal action or proceeding against the health maintenance organization on a cause of action arising in this state may be served;

(10) A statement reasonably describing the geographic area or areas to be served;

(11) A description of the complaint procedures to be utilized as required under section 27-41-11;

(12) A description of the procedures and programs to be implemented to meet the quality of health care requirements in section 27-41-4(a)(2);

(13) A description of the mechanism by which enrollees will be afforded an opportunity to participate in matters of policy and operation under section 27-41-6(b);

(14) A description of the provider networks to be utilized to provide health care services to enrollees;

(15) A description of the utilization management mechanisms by which enrollees' access to and use of health services will be controlled; and

(16) Such other information as the director in consultation with the director of health may require to make the determinations required in section 27-41-4.

(c) An applicant or a licensed health maintenance organization shall, unless otherwise provided for in this chapter, file a notice describing any material modification of the operation including but not limited to systematic changes in provider networks and mechanisms for the management and control of the use of covered services by enrollees, set out in the information required by subsection (b). The notice shall be filed with the director and with the director of health prior to the modification. If the director or the director of health does not disapprove within ninety (90) days of the filing, the modification shall be deemed approved.

(d) An applicant or a licensed health maintenance organization shall file all contracts of reinsurance. Any agreement between the organization and an insurer shall be subject to the laws of this state regarding reinsurance. All reinsurance agreements and any modifications thereto must be filed and approved. Reinsurance agreements shall remain in full force and effect for at least ninety (90) days following written notice by registered mail of cancellation by either party to the director.

SECTION 2. This act shall take effect upon passage.