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CHAPTER 58-41

HEALTH MAINTENANCE ORGANIZATIONS

58-41-1      Definition of terms.
58-41-2      Organizations subject to chapter.
58-41-3      Certificate of authority required for health maintenance organization or contracts--Violation as misdemeanor.
58-41-4      Application for certificate of authority required.
58-41-5      Repealed.
58-41-6      Verification and form of application--Contents.
58-41-7      Financial statements required with application.
58-41-8      Copies of forms required with application.
58-41-9      Marketing, charges, and financial plans required with application.
58-41-10      Appointment to receive process required of foreign applicant.
58-41-11      Surety bond or deposit required--Waiver.
58-41-12      Determination of health care qualifications.
58-41-13      Coordination with federal professional standards review.
58-41-14      Obsolete.
58-41-15      Health maintenance not considered practice of healing arts.
58-41-15.1      Certain healing arts practitioners to participate in alternate health care delivery systems.
58-41-16      Repealed.
58-41-17      Issuance or denial of certificate--Fee--Conditions for issuance.
58-41-18      Factors considered in determining financial responsibility.
58-41-19      Insurance arrangements permitted.
58-41-20      Corporation operating after certification.
58-41-21      Foreign corporations qualifying--Exemption from other requirements.
58-41-22      Filing of notice of modification of operation--Approval if not disapproved--Exemptions.
58-41-23      Composition of governing body--Consumer representation.
58-41-24      Mechanisms for enrollee participation in policy and operation of governing body.
58-41-25      Fiduciary responsibilities to enrollees.
58-41-25.1      Investments.
58-41-26      Exemption from insurance laws--Exceptions--Taxation.
58-41-27      Repealed.
58-41-28      Solicitation of enrollment not deemed professional advertising.
58-41-29      Contracts and necessary activities.
58-41-29.1      Notice required for rate increase in health maintenance contract by a health maintenance organization.
58-41-30      Sources of payment for enrollee services--Application by medical assistance recipient.
58-41-31      Direct payments to enrollees prohibited.
58-41-32      Use of words descriptive of insurance, casualty, or surety business as misdemeanor--Exception.
58-41-33      Trade practice laws applicable.
58-41-34      Evidence of coverage issued to enrollees.
58-41-35      Contents required in evidence of coverage.
58-41-35.1      Alcoholism coverage to be offered at time contract is negotiated.
58-41-35.2 to 58-41-35.4.      Repealed.


58-41-35.5      Grandfathered contracts required to cover low-dose mammography--Extent of coverage.
58-41-35.6      Exclusion of benefits for injury while under the influence of alcohol or drugs prohibited--Exception for sickness or injury caused in commission of felony.
58-41-35.7      Contracts required to cover occult breast cancer screening.
58-41-36      Unfair and misleading information in evidence of coverage as misdemeanor.
58-41-37      Deceptive advertising or evidence of coverage as misdemeanor.
58-41-38      Statements deemed untrue.
58-41-39      Statements deemed misleading.
58-41-40      Evidence of coverage deemed deceptive.
58-41-41      Issuance to enrollees of change in evidence of coverage.
58-41-42      Evidence of coverage to be approved before use--Violation as misdemeanor.
58-41-43      Filing and approval requirements applicable.
58-41-44      Charges to enrollees--Fairness--Actuary's certificate.
58-41-45      Discrimination as misdemeanor.
58-41-46 to 58-41-49. Repealed.
58-41-50      Authorized expenses.
58-41-51      Repealed.
58-41-51.1      Individual policy required for covered spouse of insured--Eligibility--Coverage--Waiting periods.
58-41-51.2      Conversion privileges of insured's spouse upon divorce.
58-41-51.3      Continuation and conversion coverage to be offered.
58-41-52      Contracts with providers of health care services.
58-41-53      Repealed.
58-41-54      Contracts with insurance companies and nonprofit health service plan corporations authorized--Limitations.
58-41-55      Insurance contracts authorized--Group coverage--Benefit payments.
58-41-56      Contracts for management and administrative services authorized.
58-41-57      Payment of unreasonably high expenses as misdemeanor.
58-41-58 to 58-41-62.      Repealed.
58-41-63      General annual report required--Form and contents.
58-41-64      Repealed.
58-41-65      Applications, filings and reports as public documents.
58-41-66      Annual summary for enrollees required--Contents.
58-41-67      Promulgation of rules.
58-41-68 to 58-41-72. Repealed.
58-41-73      Physician-patient privileges.
58-41-74      Confidential data--Exceptions.
58-41-75, 58-41-76. Repealed.
58-41-77      Repealed.
58-41-78      Cease and desist orders.
58-41-79      Hearing on cease and desist order--Procedure--Judicial review.
58-41-80      Injunctive relief against violations--Venue.
58-41-81      Suspension or revocation of certificate of authority on findings by director.
58-41-82      Additional grounds for suspension or revocation.
58-41-83      Voluntary conference before commencing actions for violation.
58-41-84      Informality in voluntary conferences.
58-41-85      Money penalty in lieu of suspension or revocation.
58-41-86      Requirements for suspension or revocation.
58-41-86.1      Suspension without notice or hearing.
58-41-87      Notice of grounds for denial, suspension, or revocation of certificate--Time of hearing--Summary proceedings excepted.
58-41-88      Administrative procedure and rules.
58-41-89      Repealed.
58-41-90      Action of director after hearing--Written findings.
58-41-91      Judicial review.
58-41-92      Activities prohibited during suspension of certificate.
58-41-93      Winding up after revocation of certificate--Continued operation to protect enrollees.
58-41-94      Summary proceeding to reorganize organization--Grounds.
58-41-95      Rehabilitation, liquidation, or conservation under insurance company laws.
58-41-96      Severability of provisions.
58-41-97      Citation of chapter.
58-41-98      Coverage for phenylketonuria.
58-41-99      Formation of voluntary health insurance purchasing organizations.
58-41-100      Membership of voluntary health insurance purchasing organizations.
58-41-101      Purchasing organization's responsibility for negotiating terms and conditions.
58-41-102      Purchasing organization's notice of premium charge.
58-41-103      Additional chapters applicable to purchasing organization.
58-41-104      Approval of purchasing organization by Division of Insurance.
58-41-105      Premiums held in trust by purchasing organization.
58-41-106      Rates for group health insurance issued to purchasing organizations.
58-41-107      Reasonable participation requirements for group members of purchasing organizations.
58-41-108      Purchasing organizations exempt from antitrust provisions.
58-41-109      Promulgation of rules for purchasing organizations.
58-41-110      Application of chapter to provider contracting with state.
58-41-111      Application of chapter to provider contracting with licensed health maintenance organization.
58-41-112      Minimum inpatient care coverage following delivery.
58-41-113      Shorter hospital stay permitted--Follow-up visit within forty-eight hours required.
58-41-114      Notice to enrollees--Disclosures.
58-41-115      Health insurance policies to provide coverage for biologically-based mental illnesses.
58-41-116      Application--Exemptions.
58-41-117      Policies to provide coverage for diabetes supplies, equipment, and education--Exceptions--Conditions and limitations.
58-41-118      Diabetes coverage not required of certain plans and policies.
58-41-119      Contracts to provide coverage for prostate cancer screening.
58-41-120      Annual report on risk bearing entities.
58-41-121      Documents provided to risk bearing entity by health maintenance organization.
58-41-122      Documents provided to health maintenance organization by risk bearing entity.
58-41-123      Notice by risk bearing entity of change in conditions--Assignment of contract.
58-41-124      Notice to director that risk bearing entity has materially failed to perform contract.
58-41-125      Confidentiality of information.
58-41-126      Nontransferable responsibilities of health maintenance organization.
58-41-127      Coverage for treatment of hearing impairment for persons under age nineteen.


     58-41-1.   Definition of terms. Terms used in this chapter mean:
             (1)      "Comprehensive health maintenance services," a set of comprehensive health services which the enrollees might reasonably require to be maintained in good health, including as a minimum, but not limited to, emergency care, inpatient hospital and physician care, outpatient medical services, and preventive medical services;
             (2)      "Director," the director of the Division of Insurance or his designee;
             (3)      "Enrollee," any person who has entered into, or is covered by a health maintenance contract;
             (4)      "Evidence of coverage," any certificate, agreement, or contract issued to an enrollee which sets out the coverage to which he is entitled under the health maintenance contract which covers him;
             (5)      "Health maintenance contract," any contract whereby a health maintenance organization agrees to provide comprehensive health maintenance services to enrollees, provided that the contract may contain reasonable enrollee copayment provisions. Any contract may provide for health care services in addition to those set forth in subdivision (1);
             (6)      "Limited health service," dental care services, vision care services, mental health services, substance abuse services, pharmaceutical services, podiatric care services, and such other services as may be determined by the director to be limited health services. Limited health service does not include hospital, medical, surgical, or emergency services except as these services are provided incident to the limited health services;
             (7)      "Provider," any person who furnishes health services and is licensed or otherwise authorized to render such services in the state;
             (8)      "Risk bearing entity," an intermediary organization that is a financial risk for services provided through contractual assumption of the obligation for the delivery of specified health care services to covered persons of the health maintenance organization.

Source: SL 1974, ch 321, § 2; SL 2013, ch 256, § 1.


     58-41-2.   Organizations subject to chapter. As used in this chapter a health maintenance organization is a corporation organized under Title 47, controlled and operated as provided in this chapter, which provides, either directly or through arrangements with providers or other persons, comprehensive health maintenance services, or arranges for the provision of such services, to enrollees on the basis of a fixed prepaid sum without regard to the frequency or extent of services furnished to any particular enrollee. A health maintenance organization may be organized pursuant to this chapter on a limited health service basis. Nothing in this chapter prohibits a health maintenance organization holding a certificate of authority in this state from issuing contracts to enrollees on a preferred provider, exclusive provider, or closed panel basis. Nothing in this chapter requires a licensed pharmacy benefit manager to obtain a certificate of authority as a health maintenance organization provided that the pharmacy benefit manager does not assume insurance risk directly from an insured.

Source: SL 1974, ch 321, § 2 (3); SL 1985, ch 393, § 1; SL 2013, ch 256, § 2.


     58-41-3.   Certificate of authority required for health maintenance organization or contracts--Violation as misdemeanor. No person shall establish or operate a health maintenance organization in this state, nor sell or offer to sell, or solicit offers to purchase or receive advance or periodic consideration in conjunction with a health maintenance organization or health maintenance contract unless such organization has a certificate of authority under this chapter. Violation of this section is a Class 2 misdemeanor.

Source: SL 1974, ch 321, §§ 3, 50; SDCL Supp, § 58-41-77; SL 1978, ch 359, § 2.


     58-41-4.   Application for certificate of authority required. Notwithstanding any law of this state to the contrary, any corporation organized to do so shall apply to the director of the Division of Insurance for a certificate of authority to establish and operate a health maintenance organization in compliance with the provisions of this chapter.

Source: SL 1974, ch 321, § 3; SL 1985, ch 393, § 2.


     58-41-5.   Repealed by SL 1985, ch 393, § 7


     58-41-6.   Verification and form of application--Contents. Each application for a certificate of authority shall be verified by an officer or authorized representative of the applicant, shall include an application fee, and shall be in a form prescribed by the director. Each application shall include the following:
             (1)      A copy of the basic organizational document, if any, of the applicant, such as the articles of incorporation, or other applicable documents, and all amendments thereto;
             (2)      A copy of the bylaws, rules, and regulations, or similar document, if any, and all amendments thereto which regulate the conduct of the affairs of the applicant;
             (3)      A list of the names, addresses, and official positions of all members of the board of directors, and the principal officers of the organization, which shall contain a full disclosure in the application of the extent and nature of any contract or financial arrangements between them and the health maintenance organization, including a full disclosure of any financial arrangements between them and any provider or other person concerning any financial relationship with the health maintenance organization;
             (4)      A statement generally describing the health maintenance organization, its health care plan or plans, facilities, and personnel, including a statement describing the manner in which the applicant proposes to provide enrollees with comprehensive health maintenance services or limited health services;
             (5)      A statement reasonably describing the geographic area or areas to be served and the type or types of enrollees to be served;
             (6)      A description of the complaint procedures to be utilized;
             (7)      A description of the procedures and programs to be implemented to meet the requirements of subdivisions 58-41-12(2) and (3) and chapters 58-17G and 58-17H and to monitor the quality of health care provided to enrollees;
             (8)      A description of the mechanism by which enrollees will be afforded an opportunity to participate in matters of policy and operation under §§ 58-41-23 and 58-41-24;
             (9)      Such other information as the director may reasonably require to be provided;
             (10)      A copy of the form of any contract made, or to be made, between the applicant and any providers regarding the provision of limited health services to enrollees;
             (11)      A copy of the form of any contract made, or to be made, between the applicant and any person listed in subdivision (3) of this section;
             (12)      A copy of the form of any contract made, or to be made, between the applicant and any person, corporation, partnership, or other entity for the performance on the applicant's behalf of any functions including marketing, administration, enrollment, investment management, and subcontracting for the provision of limited health services to enrollees;
             (13)      A copy of the form of any group contract that is to be issued to employers, unions, trustees, or other organizations and a copy of any form of evidence of coverage to be issued to subscribers;
             (14)      A copy of the applicant's financial plan, including a three-year projection of anticipated operating results, a statement of the sources of working capital, and any other sources of funding and provisions for contingencies;
             (15)      A schedule of rates and charges;
             (16)      A description of the proposed method of marketing;
             (17)      A copy of the applicant's financial statements showing the applicant's assets, liabilities, and sources of financial support, including a copy of the applicant's most recent audited financial statement and an unaudited current financial statement, or if the information is not applicable to the applicant, a list of the assets representing the initial net worth of the applicant;
             (18)      A financial plan that provides a three-year projection of operating results, including:
             (a)      A projection of balance sheets;
             (b)      Income and expense statements anticipated from the start of operations until the organization has had net income for at least one year;
             (c)      Cash flow statements showing any capital expenditures, purchase and sale of investments and deposits with the state;
             (d)      Detailed enrollment projections;
             (e)      The methodology for determining premium rates to be charged that has been certified by a qualified actuary; and
             (f)      A statement as to the sources of working capital as well as any other sources of funding;
             (19)      The names and addresses of the applicants's qualified actuary and external auditors;
             (20)      If the applicant has a parent company and the director determines that additional solvency guarantees are necessary, the parent company's guaranty, on a form acceptable to the director, that the applicant will maintain the minimum net worth required under this chapter. If no parent company exists, a statement regarding the availability of future funds, if needed;
             (21)      A description of the nature and extent of any reinsurance program to be implemented, including a detailed risk retention schedule indicating direct, assumed, ceded, and net maximum risk exposures on any one risk;
             (22)      A demonstration that errors and omission insurance or other arrangements satisfactory to the director will be in place upon the applicant's receipt of a certificate of authority;
             (23)      If the applicant is a foreign corporation, a statement from the appropriate regulatory agency of the applicant's state of domicile stating that:
             (a)      The applicant is authorized to operate as a health maintenance organization in the state of domicile;
             (b)      The regulatory agency has no objection to the applicant applying for a certificate of authority in this state;
             (24)      The name and address of the applicant's statutory agent for service of process, notice, or demand, or if not domiciled in this state, a power of attorney duly executed by the applicant, appointing the director 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;
             (25)      A description of the proposed policies, standards, and procedures for the management of health information, including proposed policies, standards, and procedures that guard against the unauthorized collection, use, or disclosure of protected health information, that complies with §§ 58-2-40 and 58-2-41;
             (26)      A description of the proposed quality assessment and improvement activities regarding the maintenance and improvement of the quality of health care services provided to covered persons;
             (27)      A description of the proposed health care provider credentialing program;
             (28)      If the health maintenance organization will provide or perform utilization review services, a description of the proposed utilization review procedures;
             (29)      A description of the proposed internal grievance procedures; and
             (30)      A description of the proposed external review procedures.

Source: SL 1974, ch 321, § 6 (1) to (4), (10) to (14); SL 2013, ch 256, § 3.


     58-41-7.   Financial statements required with application. Each application for a certificate of authority shall include 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.

Source: SL 1974, ch 321, § 6 (7).


     58-41-8.   Copies of forms required with application. Each application for a certificate of authority shall include:
             (1)      A copy of the form of each evidence of coverage to be issued to the enrollees;
             (2)      A copy of the form of each individual or group health maintenance contract which is to be issued to enrollees or their representatives.

Source: SL 1974, ch 321, § 6 (5), (6).


     58-41-9.   Marketing, charges, and financial plans required with application. Each application for a certificate of authority shall include a description of the proposed method of marketing the plan, a schedule of proposed charges, and a financial plan which includes a three-year projection of the expenses and income and other sources of future capital.

Source: SL 1974, ch 321, § 6 (8).


     58-41-10.   Appointment to receive process required of foreign applicant. Each application for a certificate of authority by an applicant not domiciled in this state shall include a power of attorney duly executed by such applicant, appointing the director and his successors in office, and duly authorized deputies, as the true and lawful attorney of such 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.

Source: SL 1974, ch 321, § 6 (9).


     58-41-11.   Surety bond or deposit required--Waiver. Each health maintenance organization shall furnish a surety bond in an amount satisfactory to the director or deposit with the director cash or securities acceptable to him in at least the same amount as a guarantee that the obligations to the enrollees will be performed. The director may waive this requirement whenever he is satisfied that the assets of the organization or its contracts with insurers, hospital or medical service corporations, governments, or other organizations are sufficient to reasonably assure the performance of its obligations.

Source: SL 1974, ch 321, § 31.


     58-41-12.   Determination of health care qualifications. The director shall determine whether the applicant for a certificate of authority has:
             (1)      Demonstrated the willingness and potential ability to assure that health care services will be provided in a manner to assure both the availability and accessibility of adequate personnel and facilities consistent with the requirements of chapter 58-17F;
             (2)      Arrangements, established in accordance with regulations promulgated by the director for an ongoing quality of health care assurance program consistent with the requirements of chapter 58-17F, concerning health care processes and outcomes;
             (3)      A procedure, established in accordance with rules promulgated pursuant to chapter 1-26 by the director, to develop, compile, evaluate, and report statistics relating to the cost of its operations, the pattern of utilization of its services, the availability and accessibility of its services, and such other matters as may be reasonably required by the director; and
             (4)      Reasonable provisions for emergency and out-of-area health care services.

Source: SL 1974, ch 321, § 8; SL 1999, ch 245, § 20; SL 2011, ch 219, § 101; SL 2013, ch 256, § 4.


     58-41-13.   Coordination with federal professional standards review. To the extent that it furthers the purposes of this chapter, the director shall attempt to coordinate the operations of this chapter relating to the quality of health care services with the operations of 42 U.S.C. sections 1320c to 1320c-19.

Source: SL 1974, ch 321, § 54; SL 2013, ch 256, § 5.


     58-41-14.   Obsolete


     58-41-15.   Health maintenance not considered practice of healing arts. Any health maintenance organization authorized under this chapter shall not be deemed to be practicing a healing art.

Source: SL 1974, ch 321, § 53.


     58-41-15.1.   Certain healing arts practitioners to participate in alternate health care delivery systems. Any optometrist licensed pursuant to chapter 36-7, podiatrist licensed pursuant to chapter 36-8, chiropractor licensed pursuant to chapter 36-5, psychologist licensed pursuant to chapter 36-27A, dentist licensed pursuant to chapter 36-6A, or social worker licensed under § 36-26-17, may organize or contract for services with a corporation organized under the laws of this state by licensed practitioners of the healing arts, for the purpose of negotiating group health care contracts and providing services within the scope of their respective licenses with alternate health care delivery systems, including health maintenance organizations, preferred provider organizations, individual practices organizations, or other similar entities.

Source: SL 1987, ch 269, § 2; SL 2013, ch 256, § 6.


     58-41-16.   Repealed by SL 2013, ch 256, § 7.


     58-41-17.   Issuance or denial of certificate--Fee--Conditions for issuance. The director of the Division of Insurance shall issue or deny a certificate of authority to any person filing an application pursuant to this chapter. Issuance of a certificate of authority shall be granted upon payment of the application fee prescribed in § 58-41-26 if the director is satisfied that the following conditions are met:
             (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 meets the requirements of § 58-41-12;
             (3)      The health maintenance contract constitutes an appropriate mechanism whereby the health maintenance organization will effectively provide or arrange for the provision of comprehensive health maintenance services on a prepaid basis, through insurance or otherwise, except to the extent of reasonable requirements for copayments;
             (4)      The health maintenance organization is financially responsible and may reasonably be expected to meet its obligations to enrollees and prospective enrollees;
             (5)      The health maintenance organization will assume full financial risk on a prospective basis for the provision of comprehensive health maintenance services, including hospital care;
             (6)      The enrollees will be afforded an opportunity to participate in matters of policy and operation pursuant to §§ 58-41-23 and 58-41-24; and
             (7)      Nothing in the proposed method of operation, as shown by the information submitted pursuant to §§ 58-41-4 to 58-41-10, inclusive, or by independent investigation, is contrary to the public interest.
     A certificate of authority may be denied only after compliance with the requirements of §§ 58-41-87 to 58-41-90, inclusive.

Source: SL 1974, ch 321, § 10; SL 1985, ch 393, § 15; SL 2013, ch 256, § 8.


     58-41-18.   Factors considered in determining financial responsibility. In making a determination under subdivision 58-41-17(4), the director may consider:
             (1)      The financial soundness of the applicant's arrangements for health care services and the proposed schedule of charges used in connection therewith;
             (2)      The adequacy of its working capital;
             (3)      Arrangements which will guarantee for a reasonable period of time the continued availability or payment of the cost of health care services in the event of discontinuance of the health maintenance organization;
             (4)      Agreements with providers for the provision of health care services; and
             (5)      Any surety bond or deposit of cash or securities submitted in accordance with § 58-41-11 as a guarantee that the obligations will be duly performed.

Source: SL 1974, ch 321, § 10 (4).


     58-41-19.   Insurance arrangements permitted. The requirement of subdivision 58-41-17(5) shall not prohibit a health maintenance organization from obtaining insurance or making other arrangements:
             (1)      For the cost of providing to any enrollee comprehensive health maintenance services, the aggregate value of which exceeds five thousand dollars in any year;
             (2)      For the cost of providing comprehensive health care services to its members on a nonelective emergency basis, or while they are outside the area served by the organization; or
             (3)      For not more than ninety-five percent of the amount by which the health maintenance organization's costs for any of its fiscal years exceeds one hundred five percent of its income for such fiscal years.

Source: SL 1974, ch 321, § 10 (5).


     58-41-20.   Corporation operating after certification. Any corporation may, upon obtaining a certificate of authority as required in this chapter, operate as a health maintenance organization.

Source: SL 1974, ch 321, § 11; SL 1985, ch 393, § 3.


     58-41-21.   Foreign corporations qualifying--Exemption from other requirements. A foreign corporation may qualify under this chapter, and if such corporation fully complies with the provisions of Title 58, then such corporation shall be exempt from complying with other provisions of the South Dakota Code concerning foreign corporations.

Source: SL 1974, ch 321, § 3; SL 1985, ch 393, § 4.


     58-41-22.   Filing of notice of modification of operation--Approval if not disapproved--Exemptions. A health maintenance organization shall, unless otherwise provided for in this chapter, file a notice describing any modification of the operation set out in the information required by §§ 58-41-6 to 58-41-10, inclusive. Such a notice shall be filed with the director prior to the modification. If the director does not disapprove within thirty days of filing, such modification shall be deemed approved. The director may promulgate rules and regulations exempting from the filing requirements of this section those items he deems unnecessary.

Source: SL 1974, ch 321, § 7.


     58-41-23.   Composition of governing body--Consumer representation. The governing body of any health maintenance organization may include enrollees, providers, or other individuals. However, after a health maintenance organization has been authorized under this chapter for one year, at least twenty percent of the governing body of a health maintenance organization shall be composed of consumers. A consumer, is any person other than a person whose occupation involves the administration of health activities or the providing of health services.

Source: SL 1974, ch 321, §§ 2 (9), 16; SL 1985, ch 393, § 5; SL 2014, ch 244, § 1.


     58-41-24.   Mechanisms for enrollee participation in policy and operation of governing body. The governing body shall establish a mechanism to afford the enrollees an opportunity to express their opinions in matters of policy and operation through the establishment of advisory panels, by the use of advisory referenda on major policy decisions, or through the use of other mechanisms as may be prescribed or permitted by the director.

Source: SL 1974, ch 321, § 16; SL 2013, ch 256, § 9.


     58-41-25.   Fiduciary responsibilities to enrollees. Any director, officer, or partner of a health maintenance organization who receives, collects, disburses, or invests funds in connection with the activities of such organization shall be responsible for such funds in a fiduciary relationship to the enrollees.

Source: SL 1974, ch 321, § 17.


     58-41-25.1.   Investments. The funds of any corporation subject to the provisions of this chapter shall be invested only in securities permitted by the laws of this state for the investment of assets of life insurance companies.

Source: SL 1985, ch 393, § 14.


     58-41-26.   Exemption from insurance laws--Exceptions--Taxation. Any health maintenance organization is exempt from all provisions of the insurance laws of this state other than this chapter. However, the corporation is subject to the provisions of this title on matters and procedures of mergers and licensure of insurance producers. The corporation is also subject to fees and taxation as insurers under § 58-2-29 and chapter 10-44. The corporation is also subject to §§ 58-17-53 and 58-17-54 if entering into a contract after July 1, 1990, with the State of South Dakota, counties, school districts, municipalities, and any other unit of state government using public funds. The state, however, may not collect premium taxes for insurance written on individuals residing outside this state or property located outside this state if no comparable tax is paid by the direct writing health maintenance organization to any appropriate taxing authority. Health maintenance organizations are also subject to the following chapters: 58-1, 58-2, 58-3, 58-4, 58-5, 58-6, 58-7, 58-11, 58-12, 58-14, 58-17, 58-17A, 58-17F, 58-17G, 58-17H, 58-17I, 58-18, 58-18A, 58-18B, 58-18C, 58-26, 58-27, 58-29B, 58-30, 58-33A; and 58-43. Nothing in chapters 58-5 or 58-6 shall be construed to prohibit a nonprofit health maintenance organization from transacting business under this title based upon its nonprofit status.
     To the extent that a health maintenance organization is compliant with the provisions of chapters 58-17F to 58-17I, inclusive, for purposes of network adequacy, quality assessment and improvements, utilization review and benefit determinations, and grievance procedure, the health maintenance organization is compliant with the provisions of this chapter.

Source: SL 1974, ch 321, § 51; SL 1985, ch 393, § 8; SL 1990, ch 411; SL 2001, ch 286, § 226; SL 2007, ch 293, § 1; SL 2013, ch 256, § 10.


     58-41-27.   Repealed by SL 1985, ch 393, § 9


     58-41-28.   Solicitation of enrollment not deemed professional advertising. Solicitation of enrollees by a health maintenance organization granted a certificate of authority, or its representatives, shall not be construed to violate any provision of law relating to solicitation or advertising by health professionals.

Source: SL 1974, ch 321, § 52.


     58-41-29.   Contracts and necessary activities. A health maintenance organization may enter into health maintenance contracts in this state and engage in any other activities consistent with this chapter which are necessary to the performance of its obligations under such contracts or authorize its representatives to do so.

Source: SL 1974, ch 321, § 12.


     58-41-29.1.   Notice required for rate increase in health maintenance contract by a health maintenance organization. Forty-five days before a health maintenance contract rate increase is effective, the health maintenance organization shall notify the enrolling unit in writing that the contract rate for the health maintenance contract offered by the organization will be increased.

Source: SL 1989, ch 434, § 4.


     58-41-30.   Sources of payment for enrollee services--Application by medical assistance recipient. Each health maintenance organization authorized to operate under this chapter or its representative, may accept from governmental agencies, private agencies, corporations, associations, groups, individuals, or other persons, payments covering all or part of the cost of health care service provided to enrollees. Any recipient of medical assistance, pursuant to Title 28, may make application to join a health maintenance organization which has been approved for medical assistance by the secretary of the Department of Social Services.

Source: SL 1974, ch 321, § 15.


     58-41-31.   Direct payments to enrollees prohibited. No health maintenance organization or representative thereof may by a health maintenance contract or evidence of coverage provide for the reimbursement of an enrollee other than through a policy of insurance, except to refund payments made by or on behalf of an enrollee.

Source: SL 1974, ch 321, § 32 (4).


     58-41-32.   Use of words descriptive of insurance, casualty, or surety business as misdemeanor--Exception. No health maintenance organization or representative thereof may use in its name, contracts, or literature any of the words "insurance," "casualty," "surety," "mutual," or any other words which are descriptive of the insurance, casualty, or surety business or deceptively similar to the name or description of any insurance or surety corporation doing business in this state; provided, however, that when a health maintenance organization has contracted with an insurance company for any coverage permitted by this chapter, it may so state. Violation of this section is a Class 2 misdemeanor.

Source: SL 1974, ch 321, §§ 32 (3), 50; SDCL Supp, § 58-41-77; SL 1978, ch 359, § 2.


     58-41-33.   Trade practice laws applicable. Each health maintenance organization, health maintenance contract, and evidence of coverage shall be subject to chapter 58-33, relating to the regulation of trade practices, except to the extent that the director determines that the nature of health maintenance organizations, health maintenance contracts, and evidences of coverage render such chapter clearly inappropriate.

Source: SL 1974, ch 321, § 33.


     58-41-34.   Evidence of coverage issued to enrollees. Every enrollee residing in this state is entitled to evidence of coverage under a health maintenance contract. The health maintenance organization or its designated representative shall issue the evidence of coverage.

Source: SL 1974, ch 321, § 18.


     58-41-35.   Contents required in evidence of coverage. An evidence of coverage shall contain a clear, concise, and complete statement of:
             (1)      The health care services and the insurance or other benefits, if any, to which the enrollee is entitled under the health care plan;
             (2)      Any exclusions or limitations on the services, kind of services, benefits, or kind of benefits, to be provided, including any deductible or copayment feature;
             (3)      Where and in what manner information is available as to how service, including emergency and out-of-area services, may be obtained;
             (4)      The total amount of payment and copayment if any, for health care services and the indemnity or service benefits, if any, which the enrollee is obligated to pay with respect to individual contracts, or an indication whether the plan is contributory or noncontributory with respect to group certificates; and
             (5)      A description of the health maintenance organization's method for resolving enrollee complaints.

Source: SL 1974, ch 321, § 19 (2).


     58-41-35.1.   Alcoholism coverage to be offered at time contract is negotiated. At the time of negotiation of any health maintenance contract, the health maintenance organization shall offer, in writing, to provide the coverage prescribed by §§ 58-17-30.5 and 58-18-7.1.

Source: SL 1979, ch 344, § 12.


     58-41-35.2 to 58-41-35.4.   Repealed by SL 2001, ch 274, §§ 10 to 12


     58-41-35.5.   Grandfathered contracts required to cover low-dose mammography--Extent of coverage. Each health maintenance contract that covers a female and that is delivered, issued for delivery, or renewed in this state, except for a contract that provides coverage for specified disease or other limited benefit coverage, shall provide coverage for screening by low-dose mammography for the presence of occult breast cancer that is subject to the same dollar limits, deductibles, and coinsurance factors as for other radiological examinations. Coverage for the screening shall be provided as follows: ages thirty-five to thirty-nine, one baseline mammography; ages forty to forty-nine, a mammography every other year; and age fifty and older, a mammography every year.
     As used in this section, "low-dose mammography" means the X ray examination of the breast using equipment dedicated specifically for mammography, including the X ray tube, filter, compression device, screens, films, and cassettes, with an average radiation exposure delivery of less than one rad midbreast, with two views for each breast and with interpretation by a qualified radiologist.
     The provisions of this section apply only to grandfathered plans pursuant to 75 Fed. Reg. 116 (2010) to be codified at 26 C.F.R. §§ 54 and 602, 29 C.F.R. § 2590, and 45 C.F.R. § 147. (SL 2011, ch 216, § 19 provides: "The provisions of this Act are repealed if the Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119 (2010), as amended by the Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, 124 Stat. 1029 (2010) is found to be unconstitutional in its entirety by a final decision of a federal court of competent jurisdiction and all appeals exhausted or time for appeals elapsed.")

Source: SL 1990, ch 397, §§ 1, 7; SL 1991, ch 400, § 7; SL 2011, ch 216, § 12.


     58-41-35.6.   Exclusion of benefits for injury while under the influence of alcohol or drugs prohibited--Exception for sickness or injury caused in commission of felony. A health maintenance contract that is delivered, issued for delivery, or renewed in this state may not exclude the payment of benefits for injuries sustained by an insured person because the insured was under the influence of alcohol or drugs, as defined by § 32-23-1.
     Nothing in this section precludes a health maintenance contract from excluding coverage for an insured for any sickness or injury caused in the commission of a felony.

Source: SL 1997, ch 290, §§ 6, 7.


     58-41-35.7.   Contracts required to cover occult breast cancer screening. Each health maintenance contract that covers a female and that is delivered, issued for delivery, or renewed in this state, except for a contract that provides coverage for specified disease or other limited benefit coverage, shall provide coverage for screening for the presence of occult breast cancer.
     The provisions of this section apply only to plans that are not grandfathered pursuant to 75 Fed. Reg. 116 (2010) to be codified at 26 C.F.R. §§ 54 and 602, 29 C.F.R. § 2590, and 45 C.F.R. § 147. (SL 2011, ch 216, § 19 provides: "The provisions of this Act are repealed if the Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119 (2010), as amended by the Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, 124 Stat. 1029 (2010) is found to be unconstitutional in its entirety by a final decision of a federal court of competent jurisdiction and all appeals exhausted or time for appeals elapsed.")

Source: SL 2011, ch 216, § 17.


     58-41-36.   Unfair and misleading information in evidence of coverage as misdemeanor. No evidence of coverage shall contain provisions or statements which are unjust, unfair, inequitable, misleading, or deceptive, as defined in §§ 58-41-37 to 58-41-40, inclusive. Violation of this section is a Class 2 misdemeanor.

Source: SL 1974, ch 321, §§ 19 (1), 50; SDCL Supp, § 58-41-77; SL 1978, ch 359, § 2.


     58-41-37.   Deceptive advertising or evidence of coverage as misdemeanor. No health maintenance organization or representative thereof may cause or knowingly permit the use of advertising or solicitation which is untrue or misleading, or any form of evidence of coverage which is deceptive. Violation of this section is a Class 2 misdemeanor.

Source: SL 1974, ch 321, §§ 32 (1), 50; SDCL, § 58-41-77; SL 1978, ch 359, § 2.


     58-41-38.   Statements deemed untrue. For the purposes of this chapter, a statement or item of information shall be deemed to be untrue if it does not conform to fact in any respect which is or may be significant to an enrollee of, or person considering enrollment in, a health maintenance organization.

Source: SL 1974, ch 321, § 32 (1) (a).


     58-41-39.   Statements deemed misleading. For the purposes of this chapter, a statement or item of information shall be deemed to be misleading, whether or not it may be literally untrue, if, in the total context in which such statement is made or such item of information is communicated, such statement or item of information may be reasonably understood by a reasonable person, not possessing special knowledge regarding health care coverage, as indicating any benefit or advantage or the absence of any exclusion, limitation, or disadvantage of possible significance to an enrollee of, or person considering enrollment in, a health care plan, if such benefit or advantage or absence of limitation, exclusion, or disadvantage does not in fact exist.

Source: SL 1974, ch 321, § 32 (1) (b).


     58-41-40.   Evidence of coverage deemed deceptive. For the purposes of this chapter, an evidence of coverage shall be deemed to be deceptive if the evidence of coverage taken as a whole, and with consideration given to typography and format, as well as language, shall be such as to cause a reasonable person, not possessing special knowledge regarding health care plans and evidences of coverage therefor, to expect benefits, services, charges, or other advantages which the evidence of coverage does not regularly make available for enrollees covered under such evidence of coverage.

Source: SL 1974, ch 321, § 32 (1) (c).


     58-41-41.   Issuance to enrollees of change in evidence of coverage. Any approved change in evidence of coverage shall be issued to each enrollee.

Source: SL 1974, ch 321, § 21.


     58-41-42.   Evidence of coverage to be approved before use--Violation as misdemeanor. No evidence of coverage or amendment thereto shall be issued or delivered to any person in this state until a copy of the form of the evidence of coverage or amendment thereto has been filed with and approved by the director. Violation of this section is a Class 2 misdemeanor.

Source: SL 1974, ch 321, §§ 20, 50; SDCL Supp, § 58-41-77; SL 1978, ch 359, § 2.


     58-41-43.   Filing and approval requirements applicable. A copy of the form of evidence of coverage to be used in this state, and any amendment thereto, shall be subject to the filing and approval requirements of § 58-41-42 unless it is subject to the jurisdiction of the director under the laws governing health insurance or hospital or medical service corporations in which event the filing and approval provisions of such laws shall apply. To the extent, however, that such provisions do not fulfill the requirements of §§ 58-41-35 and 58-41-36, the requirements of said sections shall be applicable.

Source: SL 1974, ch 321, § 22.


     58-41-44.   Charges to enrollees--Fairness--Actuary's certificate. Charges for comprehensive health maintenance services may be established in accordance with actuarial principles for various categories of enrollees, provided that such charges applicable to an enrollee shall not be individually determined based on the status of his health. However, the charges shall not be excessive, inadequate, or unfairly discriminatory. A certification, by a qualified actuary, to the appropriateness of the charges, based on reasonable assumptions, shall accompany the filing along with adequate supporting information.

Source: SL 1974, ch 321, § 23 (1).


     58-41-45.   Discrimination as misdemeanor. No health maintenance organization or representative thereof may discriminate in the rates charged enrollees except in accordance with accepted actuarial principles.
     Violation of this section is a Class 2 misdemeanor.

Source: SL 1974, ch 321, §§ 32 (6), (7), 50; SDCL Supp, § 58-41-77; SL 1978, ch 359, § 2; SL 2013, ch 256, § 11.


     58-41-46 to 58-41-49.   Repealed by SL 2013, ch 256, §§ 12 to 15.


     58-41-50.   Authorized expenses. Authorized expenses of health maintenance organizations include:
             (1)      Cash rebates to enrollees, or to persons who have made payments on behalf of enrollees;
             (2)      Free or reduced cost health service to enrollees; or
             (3)      Payments to providers or other persons based upon the efficient provision of services or as incentives to provide quality care.

Source: SL 1974, ch 321, §§ 32 (8), 50; SDCL Supp, § 58-41-77; SL 1978, ch 359, § 2; SL 1985, ch 393, § 6.


     58-41-51.   Repealed by SL 2013, ch 256, § 16.


     58-41-51.1.   Individual policy required for covered spouse of insured--Eligibility--Coverage--Waiting periods. No accident or health insurance policy providing coverage of hospital or medical expense which in addition to covering the insured also provides coverage to the spouse of the insured shall be issued without a provision that provides that upon eligibility for medicare or social security disability benefits by one spouse the other spouse shall be entitled to have issued to him or her, without evidence of insurability, upon application to the company within sixty days following the eligibility, and upon payment of the appropriate premium, an individual policy of accident or health insurance. Such policy shall provide the coverage then being issued by the insurer which is most nearly similar to the existing coverages. This obligation can be met by continuation of coverage for spouse under existing policy at the appropriate premium. Any and all probationary or waiting periods set forth in such policy shall be considered as being met to the extent coverage was in force under the prior policy.

Source: SL 1979, ch 343.


     58-41-51.2.   Conversion privileges of insured's spouse upon divorce. No accident or health insurance policy providing coverage of hospital or medical expense which in addition to covering the insured also provides coverage to the spouse of the insured shall be issued without a provision that provides that upon divorce of the insured and the insured's spouse, the spouse is entitled to have issued to him or her, without evidence of insurability, upon application to the company within thirty days following the eligibility, and upon payment of the appropriate premium, an individual policy of accident or health insurance. Such policy shall provide the coverage then being issued by the insurer which is most nearly similar to the existing coverages. This obligation can be met by continuation of coverage for spouse under existing policy at the appropriate premium. Any and all probationary or waiting periods set forth in such policy shall be considered as being met to the extent coverage was in force under the prior policy.

Source: SL 1980, ch 354.


     58-41-51.3.   Continuation and conversion coverage to be offered. At the time of negotiation of any health maintenance contract, the health maintenance organization shall offer, in writing, to provide the coverage prescribed by §§ 58-18-7.5 to 58-18-7.15, inclusive.

Source: SL 1985, ch 393, § 13.


     58-41-52.   Contracts with providers of health care services. A health maintenance organization may contract with providers of health care services to render the services the health maintenance organization has promised to provide under the terms of its health maintenance contracts.

Source: SL 1974, ch 321, § 13.


     58-41-53.   Repealed by SL 1999, ch 245, § 21


     58-41-54.   Contracts with insurance companies and nonprofit health service plan corporations authorized--Limitations. A health maintenance organization may, subject to the limitations of subdivision 58-41-17(5) and of § 58-41-19, contract with insurance companies and nonprofit health service plan corporations for insurance, indemnity, or reimbursement of its cost of providing health care services for enrollees or against the risks incurred by the health maintenance organization and may contract with insurance companies and nonprofit health service plan corporations to insure or cover the enrollees' costs and expenses in the health maintenance organization, including the customary prepayment amount and any copayment obligations. If contracts are made with insurance companies or nonprofit health service plan corporations, such companies or corporations must be authorized to transact business in this state.

Source: SL 1974, ch 321, §§ 13, 14.


     58-41-55.   Insurance contracts authorized--Group coverage--Benefit payments. Notwithstanding any law to the contrary, an insurer or a hospital or medical service corporation may contract with a health maintenance organization to provide insurance or similar protection against the cost of care provided through health maintenance organizations and to provide coverage in the event of the failure of the health maintenance organization to meet its obligations. The enrollees of a health maintenance organization constitute a permissible group for group coverage under the insurance laws and the health service plan corporation laws of this state. Under such contracts, the insurer or health service plan corporation may make benefit payments to health maintenance organizations for health care services rendered, or to be rendered, by providers pursuant to the health care plan. Any insurer, or health service plan corporation, licensed to do business in this state, is authorized to provide the types of coverages described in § 58-41-54.

Source: SL 1974, ch 321, § 35.


     58-41-56.   Contracts for management and administrative services authorized. A health maintenance organization may contract with other persons for the provision of services, including, but not limited to, managerial and administration, marketing and enrolling, data processing, actuarial analysis, and billing services.

Source: SL 1974, ch 321, § 14.


     58-41-57.   Payment of unreasonably high expenses as misdemeanor. No health maintenance organization shall incur or pay for any expense of any nature which is unreasonably high in relation to the value of the service or goods provided. Violation of this section is a Class 2 misdemeanor.

Source: SL 1974, ch 321, §§ 41, 50; SDCL Supp, § 58-41-77; SL 1978, ch 359, § 2.


     58-41-58 to 58-41-62.   Repealed by SL 1996, ch 296, §§ 9 to 13


     58-41-63.   General annual report required--Form and contents. Every health maintenance organization shall annually, on or before March first, file a report verified by at least two principal officers with the director, covering the preceding calendar year. Such report shall be on forms prescribed by the director and shall include:
             (1)      A financial statement of the organization, including its balance sheet and receipts and disbursements for the preceding year certified by an independent certified public accountant licensed by an appropriate jurisdiction, reflecting at least:
             (a)      Prepayment and other payments received for health care services rendered;
             (b)      Expenditures to all providers, by classes or groups of providers, and insurance companies or nonprofit health service plan corporations engaged to fulfill obligations arising out of the health maintenance contract; and
             (c)      Expenditures for capital improvements, or additions thereto, including but not limited to construction, renovation or purchase of facilities and capital equipment;
             (2)      Any material changes in the information submitted pursuant to §§ 58-41-6 to 58-41-9, inclusive;
             (3)      The number of new enrollees enrolled during the year, the number of enrollees as of the end of the year and the number of enrollees terminated during the year;
             (4)      A summary of information compiled pursuant to subdivision 58-41-12(3) on such form as may be required by the director;
             (5)      A report of the names and residence addresses of all persons set forth in subdivision 58-41-6(3), who were associated with the health maintenance organization during the preceding year, and the amount of wages, expense reimbursements, or other payments to such individuals for services to the health maintenance organization, including a full disclosure of all financial arrangements during the preceding year required to be disclosed pursuant to subdivision 58-41-6(3); and
             (6)      Such other information relating to the performance of the health maintenance organization as is reasonably necessary to enable the director to carry out his duties under this chapter.

Source: SL 1974, ch 321, § 24; SL 2013, ch 256, § 17.


     58-41-64.   Repealed by SL 1985, ch 393, § 10


     58-41-65.   Applications, filings and reports as public documents. All applications, filings, and reports required under this chapter are public documents except as provided for by § 1-27-30.

Source: SL 1974, ch 321, § 57; SL 2013, ch 256, § 18.


     58-41-66.   Annual summary for enrollees required--Contents. Every health maintenance organization or its representative shall annually, before April first, provide to its enrollees a summary of:
             (1)      Its most recent annual financial statement, including a balance sheet and statement of receipts and disbursements;
             (2)      A description of the health maintenance organization, its health care plan or plans, its facilities and personnel, and any material changes therein since the last report;
             (3)      The current evidence of coverage; and
             (4)      The health maintenance organization's method for resolving enrollee complaints.

Source: SL 1974, ch 321, § 25.


     58-41-67.   Promulgation of rules. The director may, pursuant to chapter 1-26, promulgate such reasonable rules as are necessary to carry out the provisions of this chapter. Included among such rules shall be those which provide minimum requirements for the provision of comprehensive health maintenance services, as defined in subdivision 58-41-1(1), and reasonable exclusions therefrom.

Source: SL 1974, ch 321, § 42; SL 1986, ch 22, § 43; SL 2013, ch 256, § 19.


     58-41-68 to 58-41-72.   Repealed by SL 2013, ch 256, §§ 20 to 24.


     58-41-73.   Physician-patient privileges. A health maintenance organization shall be entitled to claim any statutory privileges against such disclosure which the provider who furnished such information to the health maintenance organization is entitled to claim.

Source: SL 1974, ch 321, § 36 (5).


     58-41-74.   Confidential data--Exceptions. Any data or information pertaining to the diagnosis, treatment, or health of any enrollee, or any application obtained from any person, shall be confidential and shall not be disclosed to any person except:
             (1)      To the extent that it may be necessary to carry out the purposes of this chapter;
             (2)      Upon the express consent of the enrollee or applicant;
             (3)      Pursuant to statute or court order for the production of evidence or the discovery thereof; or
             (4)      In the event of a claim or litigation between such person and the provider or health maintenance organization wherein such data or information is pertinent.

Source: SL 1974, ch 321, § 36 (5).


     58-41-75, 58-41-76.   Repealed by SL 2013, ch 256, §§ 25, 26.


     58-41-77.   Repealed by SL 1978, ch 359, § 3


     58-41-78.   Cease and desist orders. The director may issue an order directing a health maintenance organization or a representative of a health maintenance organization to cease and desist from engaging in any act or practice in violation of the provision of this chapter.

Source: SL 1974, ch 321, § 47.


     58-41-79.   Hearing on cease and desist order--Procedure--Judicial review. Within twenty days after service of the order to cease and desist, the respondent may request a hearing on the question of whether acts or practices in violation of this chapter have occurred. Such hearings shall be conducted pursuant to, and judicial review shall be available as provided by, chapter 1-26.

Source: SL 1974, ch 321, § 48.


     58-41-80.   Injunctive relief against violations--Venue. In the event of any violation of the provisions of this chapter, if the director elects not to issue a cease and desist order, or in the event of noncompliance with a cease and desist order pursuant to § 58-41-79, the director may institute a proceeding to obtain injunctive relief or other appropriate relief in the circuit court serving Hughes County.

Source: SL 1974, ch 321, § 49.


     58-41-81.   Suspension or revocation of certificate of authority on findings by director. The director may suspend or revoke any certificate of authority issued to a health maintenance organization under this chapter if the director finds that any of the following conditions exists:
             (1)      The health maintenance organization is operating significantly in contravention of its basic organizational document, its health maintenance contract, or in a manner contrary to that described in and reasonably inferred from any other information submitted under this chapter, unless amendments to such submissions have been filed with and approved by the director;
             (2)      The health maintenance organization issues evidence of coverage or uses a schedule or charges for health care services which do not comply with the requirements of §§ 58-41-34 to 58-41-45, inclusive;
             (3)      The health care plan does not provide or arrange for comprehensive health maintenance services;
             (4)      The health maintenance organization is no longer financially responsible and may reasonably be expected to be unable to meet its obligations to enrollees or prospective enrollees;
             (5)      The health maintenance organization has failed to implement a mechanism affording the enrollees an opportunity to participate in matters of policy and operation under the provisions of §§ 58-41-23 and 58-41-24;
             (6)      The health maintenance organization has failed to implement the complaint system in a manner designed to reasonably resolve valid complaints;
             (7)      The health maintenance organization, or any person acting with its sanction, has advertised or merchandised its services in an untrue, misrepresentative, misleading, deceptive, or unfair manner;
             (8)      The continued operation of the health maintenance organization would be hazardous to its enrollees; or
             (9)      The health maintenance organization has otherwise failed to substantially comply with this chapter, has violated a provision of chapter 58-33 or any other provision of law applicable to health maintenance organizations, or has submitted false information in any report required hereunder.

Source: SL 1974, ch 321, § 37; SL 2000, ch 235, § 3; SL 2013, ch 256, § 27.


     58-41-82.   Additional grounds for suspension or revocation. The director may suspend or revoke any certificate of authority issued to a health maintenance organization under this chapter if:
             (1)      The health maintenance organization does not meet the requirements of § 58-41-12; or
             (2)      The health maintenance organization is unable to fulfill its obligations to furnish comprehensive health maintenance services as required under its health maintenance contract.

Source: SL 1974, ch 321, § 37 (4); SL 2013, ch 256, § 28.


     58-41-83.   Voluntary conference before commencing actions for violation. If the director, for any reason, has cause to believe that any violation of this chapter has occurred or is threatened, the director may, before commencing action under § 58-41-81, 58-41-82, 58-41-85, or 58-41-87, give notice to the health maintenance organization and to the representatives, or other persons who appear to be involved in such suspected violations, to arrange a voluntary conference with the alleged violators or their authorized representatives for the purpose of attempting to ascertain the fact that any violation has occurred or is threatened, to arrive at an adequate and effective means of correcting or preventing such violation.

Source: SL 1974, ch 321, § 45; SL 2013, ch 256, § 29.


     58-41-84.   Informality in voluntary conferences. Proceedings under § 58-41-83 are not governed by any formal procedural requirements, and may be conducted in such manner as the director finds appropriate under the circumstances.

Source: SL 1974, ch 321, § 46; SL 2013, ch 256, § 30.


     58-41-85.   Money penalty in lieu of suspension or revocation. The director may, in lieu of suspension or revocation of a certificate of authority under 58-41-81 or 58-41-82, levy a money penalty pursuant to § 58-4-28.1.

Source: SL 1974, ch 321, § 44; SL 2000, ch 235, § 4.


     58-41-86.   Requirements for suspension or revocation. A certificate of authority shall be suspended or revoked only after compliance with the requirements of §§ 58-41-87 to 58-41-91, inclusive.

Source: SL 1974, ch 321, § 37.


     58-41-86.1.   Suspension without notice or hearing. The director of the Division of Insurance may, without advance notice or a hearing thereon, immediately suspend the certificate of authority of a health maintenance organization as to which proceedings for receivership, conservatorship, rehabilitation, or other delinquency proceedings have been commenced in any state by the public supervisory official of such state. Proceedings in such actions shall be conducted in accordance with §§ 58-6-49 to 58-6-61, inclusive.

Source: SL 1985, ch 393, § 12.


     58-41-87.   Notice of grounds for denial, suspension, or revocation of certificate--Time of hearing--Summary proceedings excepted. If the director has cause to believe that grounds for the denial of an application for a certificate of authority exist, or that grounds for the suspension or revocation of a certificate of authority exist, the director shall notify the health maintenance organization in writing specifically stating the grounds for denial, suspension, or revocation and fixing a time of at least twenty days thereafter for a hearing on the matter, except in summary proceedings as provided in § 58-41-94.

Source: SL 1974, ch 321, § 39; SL 2013, ch 256, § 31.


     58-41-88.   Administrative procedure and rules. The provisions of chapter 1-26, including the right of judicial review, apply to proceedings under §§ 58-41-85 to 58-41-91, inclusive, to the extent those provisions are not in conflict with other provisions of such sections.

Source: SL 1974, ch 321, § 39 (4); SL 2000, ch 235, § 5.


     58-41-89.   Repealed by SL 2013, ch 256, § 32.


     58-41-90.   Action of director after hearing--Written findings. After hearing pursuant to §§ 58-41-87 and 58-41-88, or upon the failure of the health maintenance organization to appear at such hearing, the director shall take action as is deemed advisable on written findings which shall be mailed to the health maintenance organization.

Source: SL 1974, ch 321, § 39 (2); SL 2013, ch 256, § 33.


     58-41-91.   Judicial review. The action of the director is subject to the court of primary jurisdiction for claims of the nature and magnitude described. The court may, in disposing of the issue before it, modify, affirm, or reverse the order of the director in whole or in part.

Source: SL 1974, ch 321, § 39 (3); SL 2013, ch 256, § 34.


     58-41-92.   Activities prohibited during suspension of certificate. When the certificate of authority of a health maintenance organization is suspended, the health maintenance organization may not, during the period of such suspension, enroll any additional enrollees except newborn children or other newly acquired dependents of existing enrollees, and may not engage in any advertising or solicitation whatsoever. A health maintenance organization may not enroll such additional enrollees if it is suspended on those grounds in subdivisions 58-41-81(4) and (8) and § 58-41-86.1.

Source: SL 1974, ch 321, § 38; SL 1985, ch 393, § 11.


     58-41-93.   Winding up after revocation of certificate--Continued operation to protect enrollees. When the certificate of authority of a health maintenance organization is revoked, the organization shall proceed, immediately following the effective date of the order of revocation, to wind up its affairs, and shall conduct no further business except as may be essential to the orderly conclusion of the affairs of the organization. It shall engage in no further advertising or solicitation whatsoever. The director may, by written order, permit further operation of the organization as he may find to be in the best interest of enrollees, to the end that enrollees will be afforded the greatest practical opportunity to obtain continuing health care coverage.

Source: SL 1974, ch 321, § 38.


     58-41-94.   Summary proceeding to reorganize organization--Grounds. The director may apply for an order directing him to rehabilitate, liquidate, or conserve a health maintenance organization upon any one or more of the grounds set out in chapter 58-29B, or when in his opinion the continued operation of the health maintenance organization would be hazardous either to the enrollees or the people of this state.

Source: SL 1974, ch 321, § 40.


     58-41-95.   Rehabilitation, liquidation, or conservation under insurance company laws. Any rehabilitation, liquidation, or conservation of a health maintenance organization shall be deemed to be the rehabilitation, liquidation, or conservation of an insurance company and shall be conducted under the supervision of the director pursuant to chapter 58-29B, except to the extent that the nature of health maintenance organizations renders such law clearly inappropriate.

Source: SL 1974, ch 321, § 40.


     58-41-96.   Severability of provisions. If a part of this chapter is invalid, all valid parts that are severable from the invalid part remain in effect. If a part of this chapter is invalid in one or more of its applications, the part remains in effect in all valid applications that are severable from the invalid applications.

Source: SL 1974, ch 321, § 58.


     58-41-97.   Citation of chapter. This chapter may be cited as the "Health Maintenance Organization Act of 1974."

Source: SL 1974, ch 321, § 1.


     58-41-98.   Coverage for phenylketonuria. Every health maintenance contract that is delivered, issued for delivery, or renewed in this state, except for policies that provide coverage for specified disease or other limited benefit coverage, shall offer coverage for testing, diagnosis, and treatment of phenylketonuria including dietary management, formulas, case management, intake and screening, assessment, comprehensive care planning, and service referral.

Source: SL 1992, ch 348, § 6.


     58-41-99.   Formation of voluntary health insurance purchasing organizations. Notwithstanding the provisions of chapter 47-34, §§ 47-15-2, 47-22-4, and 47-14-2, any organization may form for the purposes of purchasing group health insurance on a voluntary basis. For purposes of §§ 58-41-99 to 58-41-109, inclusive, an organization means any nonprofit organization or nonprofit corporation formed under South Dakota law.

Source: SL 1994, ch 382, § 1.


     58-41-100.   Membership of voluntary health insurance purchasing organizations. Any organization may have a group health insurance policy issued to that organization on behalf of its members who would be insured under such policy. Members may join the organization, for the purpose of obtaining group health insurance, as individuals, employers, labor unions, associations, or substantially similar groups.

Source: SL 1994, ch 382, § 2.


     58-41-101.   Purchasing organization's responsibility for negotiating terms and conditions. The organization shall be responsible for negotiating the terms and conditions of insurance contracts, collection of premiums, and providing notice to members.

Source: SL 1994, ch 382, § 3.


     58-41-102.   Purchasing organization's notice of premium charge. The organization may provide not less than forty-five days advance notice of any benefit or premium change to its members.

Source: SL 1994, ch 382, § 4.


     58-41-103.   Additional chapters applicable to purchasing organization. Any organization is subject to all applicable provisions of chapter 58-3 and chapter 58-33.

Source: SL 1994, ch 382, § 5.


     58-41-104.   Approval of purchasing organization by Division of Insurance. Any organization shall, prior to its engaging in the business of insurance, obtain approval from the Division of Insurance. The division may deny approval or withdraw approval of an organization to engage in the business of insurance for any of the following reasons:
             (1)      Any of the grounds specified in § 58-6-8;
             (2)      Insufficient membership control of the organization;
             (3)      Unreasonable compensation to officers, directors, or employees of the organization;
             (4)      Misuse of premiums; or
             (5)      Refusal to be examined or to cooperate in an examination.

Source: SL 1994, ch 382, § 6.


     58-41-105.   Premiums held in trust by purchasing organization. The organization shall hold all premiums received in trust and promptly remit premiums to the person entitled thereto.

Source: SL 1994, ch 382, § 7.


     58-41-106.   Rates for group health insurance issued to purchasing organizations. Any insurer issuing group health insurance pursuant to §§ 58-41-99 to 58-41-109, inclusive, is subject to all of the provisions of chapter 58-18B relating to rates.

Source: SL 1994, ch 382, § 8.


     58-41-107.   Reasonable participation requirements for group members of purchasing organizations. An insurer may as a condition of offering coverage or continuing coverage require reasonable participation requirements of groups who become members of an organization.

Source: SL 1994, ch 382, § 9.


     58-41-108.   Purchasing organizations exempt from antitrust provisions. Any organization formed pursuant to §§ 58-41-99 to 58-41-109, inclusive, is exempt from the antitrust provisions under chapter 37-1.

Source: SL 1994, ch 382, § 10.


     58-41-109.   Promulgation of rules for purchasing organizations. The director may promulgate rules pursuant to chapter 1-26 to further the provisions of §§ 58-41-99 to 58-41-109, inclusive, and for purposes of carrying out the provisions of §§ 58-18-1 to 58-18-6, inclusive, and to ensure that group health insurance coverage is issued to eligible groups and that organizations are formed and operated to further the purpose of providing economical group health insurance for its members. The rules may include:
             (1)      Definition of terms;
             (2)      Criteria for determining groups, associations, organizations, and trusts and their eligibility for coverage;
             (3)      Criteria for determining substantially similar groups or for determining related industries;
             (4)      Application requirements and procedures;
             (5)      Reasonable compensation; and
             (6)      Organizational structure.

Source: SL 1994, ch 382, § 11.


     58-41-110.   Application of chapter to provider contracting with state. Nothing in this chapter applies to a medical provider who enters into a contract with the State of South Dakota for services pursuant to chapter 3-12A.

Source: SL 1995, ch 294, § 1.


     58-41-111.   Application of chapter to provider contracting with licensed health maintenance organization. Any medical provider who enters into a contract for medical services with a licensed health maintenance organization or a health insurer licensed pursuant to this title is not required to be licensed pursuant to this chapter.

Source: SL 1995, ch 294, § 2.


     58-41-112.   Minimum inpatient care coverage following delivery. If a health maintenance contract issued or renewed on or after July 1, 1996, by a health maintenance organization provides maternity coverage, the contract shall provide coverage for a minimum of forty-eight hours of inpatient care following a vaginal delivery and a minimum of ninety-six hours of inpatient care following delivery by cesarean section for a mother and her newborn child in a health care facility licensed pursuant to chapter 34-12, except as otherwise provided in § 58-41-113. Any individual policy and any policy issued to employers with less than fifteen employees that provides coverage for complications of pregnancy, and does not provide other maternity benefits, is not required to comply with this section.

Source: SL 1996, ch 292, § 16; SL 1998, ch 290, § 6.


     58-41-113.   Shorter hospital stay permitted--Follow-up visit within forty-eight hours required. If the treating physician determines that the mother and the newborn meet medical criteria contained in Guidelines for Perinatal Care, Third Edition, of the American Academy of Pediatrics and the American College of Obstetricians and Gynecologists as in effect on January 1, 1996, a health maintenance contract may provide coverage for a shorter length of hospital inpatient stay for services related to maternity and newborn care than is required in § 58-41-112 if the coverage includes one follow-up visit in the first forty-eight hours after discharge to verify the condition of the mother and newborn.

Source: SL 1996, ch 292, § 17.


     58-41-114.   Notice to enrollees--Disclosures. The health maintenance organization shall provide notice to enrollees regarding the coverage required by § 58-41-112 in accordance with rules adopted by the director of the Division of Insurance pursuant to chapter 1-26. The notice shall be in writing and prominently positioned in any literature or correspondence. The notice shall be transmitted to enrollees in the next mailing to enrollees, in the yearly informational packet sent to enrollees, or by January 1, 1997, whichever is earliest.

Source: SL 1996, ch 292, § 18.


     58-41-115.   Health insurance policies to provide coverage for biologically-based mental illnesses. Every health maintenance contract that is delivered, issued for delivery, or renewed in this state, except for policies that provide coverage for specified disease or other limited benefit coverage, shall provide, in writing, coverage for the treatment and diagnosis of biologically-based mental illnesses with the same dollar limits, deductibles, coinsurance factors, and restrictions as for other covered illnesses.
     The term, biologically-based mental illness, means schizophrenia and other psychotic disorders, bipolar disorder, major depression, and obsessive-compulsive disorder.

Source: SL 1998, ch 291, § 6; SL 1999, ch 251, § 6.


     58-41-116.   Application--Exemptions. The provisions of § 58-41-115 do not apply to any plan, policy, or contract that provides coverage only for:
             (1)      Specified disease;
             (2)      Hospital indemnity;
             (3)      Fixed indemnity;
             (4)      Accident-only;
             (5)      Credit;
             (6)      Dental;
             (7)      Vision;
             (8)      Prescription drug;
             (9)      Medicare supplement;
             (10)      Long-term care;
             (11)      Disability income insurance;
             (12)      Coverage issued as a supplement to liability insurance;
             (13)      Workers' compensation or similar insurance;
             (14)      Automobile medical payment insurance; or
             (15)      Individual health benefit plans of six-months duration or less that are not renewable.

Source: SL 1998, ch 291, § 7.


     58-41-117.   Policies to provide coverage for diabetes supplies, equipment, and education--Exceptions--Conditions and limitations. Every health maintenance contract delivered, issued for delivery, or renewed in this state, except for policies that provide coverage for specified disease or other limited benefit coverage, shall provide, in writing, coverage for equipment, supplies, and self-management training and education, including medical nutrition therapy, for treatment of persons diagnosed with diabetes if prescribed by a physician or other licensed health care provider legally authorized to prescribe such treatment. Medical nutrition therapy does not include any food items or nonprescription drugs.
     Coverage for medically necessary equipment and supplies shall include blood glucose monitors, blood glucose monitors for the legally blind, test strips for glucose monitors, urine testing strips, insulin, injection aids, lancets, lancet devices, syringes, insulin pumps and all supplies for the pump, insulin infusion devices, prescribed oral agents for controlling blood sugars, glucose agents, glucagon kits, insulin measurement and administration aids for the visually impaired, and other medical devices for treatment of diabetes.
     Diabetes self-management training and education shall be covered if: (a) the service is provided by a physician, nurse, dietitian, pharmacist, or other licensed health care provider who satisfies the current academic eligibility requirements of the National Certification Board for Diabetic Educators and has completed a course in diabetes education and training or has been certified as a diabetes educator; and (b) the training and education is based upon a diabetes program recognized by the American Diabetes Association or a diabetes program with a curriculum approved by the American Diabetes Association or the South Dakota Department of Health.
     Coverage of diabetes self-management training is limited to (a) persons who are newly diagnosed with diabetes or have received no prior diabetes education; (b) persons who require a change in current therapy; (c) persons who have a co-morbid condition such as heart disease or renal failure; or (d) persons whose diabetes condition is unstable. Under these circumstances, no more than two comprehensive education programs per lifetime and up to eight follow-up visits per year need be covered. Coverage is limited to the closest available qualified education program that provides the necessary management training to accomplish the prescribed treatment.
     The benefits provided in this section are subject to the same dollar limits, deductibles, coinsurance, and other restrictions established for all other benefits covered in the contract.

Source: SL 1999, ch 252, § 11.


     58-41-118.   Diabetes coverage not required of certain plans and policies. The provisions of § 58-41-117 do not apply to any plan, policy, or contract that provides coverage only for:
             (1)      Specified disease;
             (2)      Hospital indemnity;
             (3)      Fixed indemnity;
             (4)      Accident-only;
             (5)      Credit;
             (6)      Dental;
             (7)      Vision;
             (8)      Prescription drug;
             (9)      Medicare supplement;
             (10)      Long-term care;
             (11)      Disability income insurance;
             (12)      Coverage issued as a supplement to liability insurance;
             (13)      Workers' compensation or similar insurance;
             (14)      Automobile medical payment insurance;
             (15)      Individual health benefit plans of six-months' duration or less that are not renewable; or
             (16)      Individual nonmajor medical insurance.

Source: SL 1999, ch 252, § 12.


     58-41-119.   Contracts to provide coverage for prostate cancer screening. Every health maintenance contract that covers a male and that is delivered, issued for delivery, or renewed in this state, except for policies that provide coverage for specified disease or other limited benefit coverage, shall provide the following coverage for diagnostic screening for prostate cancer:
             (1)      An annual medically recognized diagnostic examination, including a digital rectal examination and a prostate-specific antigen test, as follows:
             (a)      For asymptomatic men aged fifty and over; and
             (b)      For men aged forty-five and over at high risk for prostate cancer; and
             (2)      For males of any age who have a prior history of prostate cancer, medically indicated diagnostic testing at intervals recommended by a physician, including the digital rectal examination, prostate-specific antigen test, and bone scan.

Source: SL 2001, ch 277, § 6.


     58-41-120.   Annual report on risk bearing entities. A health maintenance organization shall file annually, as part of its access plan, a list of all risk bearing entities with which it has an agreement or contract and the number of covered persons assigned or selected by each risk bearing entity.

Source: SL 2013, ch 256, § 35.


     58-41-121.   Documents provided to risk bearing entity by health maintenance organization. In entering into, amending, or renewing a contract with a risk bearing entity, a health maintenance organization shall, unless already specified in the contract, provide the following, upon request, to a risk bearing entity:
             (1)      At the time the contract is entered into, a written statement describing the amount or method of remuneration to be paid to the risk bearing entity. If any part of the remuneration is a calculated amount based on variable factors, the payment methodology upon which the calculated amount will be determined. The statement shall specify the services and expenses for which the risk bearing entity is financially liable in whole or part;
             (2)      At the time payment is made, the basis of the calculation of that payment;
             (3)      For health benefit plans in which the covered persons are assigned to the risk bearing entity under a capitated payment arrangement, a list of enrollees and payments due to the risk bearing entity, to be provided monthly if not already available to the risk bearing entity;
             (4)      At the time the contract is entered into, a copy of the health maintenance organization's most recent annual statement filed with the NAIC; and
             (5)      Once the contract is in effect, the quarterly or annual statement.

Source: SL 2013, ch 256, § 36.


     58-41-122.   Documents provided to health maintenance organization by risk bearing entity. A health maintenance organization shall include in any contract with a risk bearing entity a requirement that the risk bearing entity provide to the health maintenance organization at the time a contract is entered into and annually thereafter the following:
             (1)      Annual audited GAAP report in accordance with generally accepted accounting principles in the United States (U.S. GAAP);
             (2)      Documentation that satisfies the health maintenance organization that the risk bearing entity has sufficient ability to accept risk; and
             (3)      Documentation that satisfies the health maintenance organization that the risk bearing entity has appropriate management expertise and infrastructure.
     The contract shall also require that the risk bearing entity on a quarterly basis provide status reports that include the following:
             (1)      Financial statements prepared in accordance with U.S. GAAP;
             (2)      An aging report of the percentage of claims that have been paid, pended, or denied, across all contracts with risk bearing entities; and
             (3)      On a monthly basis, a report of the estimated reported claims and incurred but not reported claims liability of the risk bearing entity.

Source: SL 2013, ch 256, § 37.


     58-41-123.   Notice by risk bearing entity of change in conditions--Assignment of contract. A health maintenance organization shall require in any contract with a risk bearing entity that the risk bearing entity provide notice to the health maintenance organization within thirty days of:
             (1)      Any changes involving the ownership structure of the risk bearing entity; or
             (2)      Financial or operational concerns regarding the financial viability of the risk bearing entity.
     A health maintenance organization shall also require in any contract with a risk bearing entity a provision that allows the director, in the event that a risk bearing entity fails to comply with any provision of §§ 58-41-120 to 58-41-126, inclusive, to assign for six months, the risk bearing entity's contract with providers to furnish covered services.

Source: SL 2013, ch 256, § 38.


     58-41-124.   Notice to director that risk bearing entity has materially failed to perform contract. A health maintenance organization shall have procedures in place to notify the director within a reasonable time that a risk bearing entity has materially failed to perform under its contract with the health maintenance organization. A health maintenance organization is not in violation of this section if it acts in good faith in its attempt to comply with this section. A health maintenance organization shall maintain systems and controls for reviewing the information provided to the health maintenance organization by the risk bearing entity pursuant to §§ 58-41-120 to 58-41-126, inclusive.

Source: SL 2013, ch 256, § 39.


     58-41-125.   Confidentiality of information. Any information provided to the director by a health maintenance organization relative to risk bearing entities with which it is contracted is confidential and may not be disclosed to any person except to the extent that it is necessary to carry out the purposes of §§ 58-41-120 to 58-41-126, inclusive, and as allowed by state law, regardless of whether the information is in the form of paper, is preserved on microfilm, or is stored in computer readable form. If the information is disclosed pursuant to this section, the health maintenance organization providing the notice is not liable for the disclosure or any subsequent use or misuse of the information. The health maintenance organization is entitled to claim any statutory privileges against disclosure that the entity that provided the information to the health maintenance organization is entitled to claim. This section is not intended to create a private right of action.

Source: SL 2013, ch 256, § 40.


     58-41-126.   Nontransferable responsibilities of health maintenance organization. Notwithstanding any agreement to the contrary, the health maintenance organization shall:
             (1)      Retain full responsibility on a prospective basis for the provision of health care services pursuant to any applicable health benefit plan; and
             (2)      At all times, be able to demonstrate to the satisfaction of the director that the health maintenance organization can fulfill its nontransferable obligation to provide health care services to covered persons in any event, including the failure, for any reason, of a risk bearing entity.

Source: SL 2013, ch 256, § 41.


     58-41-127.   Coverage for treatment of hearing impairment for persons under age nineteen. Any qualified health plan issued on or after January 1, 2015, that offers coverage for professional audiology services shall include coverage for medically necessary physician services appropriate for the treatment of hearing impairment to a person under the age of nineteen. This shall include professional services rendered by an audiologist licensed pursuant to chapter 36-24.
     The benefits provided shall be subject to the same dollar limits, deductibles, coinsurance and other limitations provided for other covered benefits in the policy.
     Nothing in this section requires the payment by the health plan of hearing aids, devices, or equipment to correct hearing impairment or loss.

Source: SL 2014, ch 237, § 4.


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