ARIZONA STATE SENATE
Phoenix, Arizona
REVISED
insurance; third
party intermediary; bond
Requires third party intermediaries with the contractual
responsibility to process and pay claims of health providers to post a bond.
Background
Legislation adopted
in 2000 facilitated numerous changes to law governing managed health care plans
(Laws 2000, Chapter 37). Among the
changes was a requirement that third party intermediaries (TPA) assuming risk
post a bond in the amount of two months annualized revenue. This was intended to protect those whom are
insured, health care providers and health care insurers whose monies the
intermediary handled, particularly in the instance of insolvency. Subsequently, Legislation adopted in 2001
addressed insolvency and prioritization of payment of claims (Laws 2001,
Chapter 328). In particular, the
legislation created a bond exemption for third party intermediaries. Current
law does not require a TPA involved in processing and paying claims of health
care providers to post a bond if:
·
The TPA has not been
delegated the responsibility to process and pay the claims of the health care
providers for which the intermediary has assumed the business risk; or
·
The TPA has been delegated
the responsibility to process and pay the claims of health care providers who
have contracted with the intermediary stipulating that the provider agreed to
hold health care insurers or insureds harmless from paying the claims of the
health care providers in the event that the intermediary failed to pay such
claims.
Concerns have been raised regarding the payment for
services by a health care provider if a TPA became insolvent. This measure requires TPA’s with the contractual
responsibility to process and pay claims of health providers post a bond in the
amount of one month of annualized
revenue.
There is no anticipated fiscal impact to the state general fund associated with this measure.
1. Eliminates
the exemption of third party intermediaries, with the contractual
responsibility to process and pay claims of a health provider, from posting a
bond in the amount of one month of annualized revenue.
2. Exempts third party intermediaries currently holding contracts with health care providers from the provisions of the bill if the third party intermediary:
a) notifies the Department of Insurance that it is in operation and identifies the health care institution for which services are provided; and
b) includes an affidavit attesting that all subcontracts with health care providers contain a provision specifying that insurers and insureds are held harmless if the intermediary fails to pay the claims.
3. Requires the intermediary to send a copy of the notice to the applicable insurer.
4. Makes technical changes.
5. Provides for a general effective date.
Amendments Adopted by Committee
1. Reduces the amount of the bond an intermediary with the contractual responsibility to process and pay claims of a health care provider is required to post from two months annualized revenue to one month of annualized revenue.
2. Requires intermediaries exempt from posting a bond to include an affidavit attesting that all subcontracts with health care providers contain a provision specifying that insurers and insureds are held harmless if the intermediary fails to pay the claims.
FII 2/6/02 DPA 8-0-0-2 BI 4/4/02 DPA 5-0-1-0
3rd Read 3/21/02 54-0-6-0
Prepared by Senate Staff
April 4, 2002